Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

DERBY CHURCHES (SAINT CHRISTOPHER'S, SAINT PETER'S AND SAINT PAUL'S) BILL

BRITISH WATERWAYS BILL

OLDHAM CORPORATION BILL

THAMES CONSERVANCY BILL

Read the Third time and passed.

BRITISH RAILWAYS BILL

BRITISH TRANSPORT DOCKS BILL

[Queen's Consent, on behalf of the Crown, signified]

Bills read the Third time and passed.

KENT QUARTER SESSIONS BILL [Lords]

Read the Third time and passed, with Amendments.

LOUGHBOROUGH UNIVERSITY OF TECHNOLOGY BILL [Lords]

UNIVERSITY OF SURREY BILL [Lords]

As amended, considered; to be read the Third time.

Oral Answers to Questions — RHODESIA

Economic Sanctions

Mr. Edward M. Taylor: asked the Secretary of State for Commonwealth Relations what information he now has regarding the effect of economic sanctions on Southern Rhodesia.

The Secretary of State for Commonwealth Relations (Mr. Arthur Bottomley): On 27th April I described some of the effects of sanctions on the

Rhodesian economy. Recent evidence, including some significant admissions by the régime itself, amply justifies the claims I then made about the effectiveness of our policy which we are resolved to maintain until Rhodesia returns to constitutional government. We have succeeded in obtaining overwhelming international support for our economic sanctions against Rhodesia and have now denied to the illegal régime access to nearly all Rhodesia's normal export markets outside South Africa.

Mr. Taylor: Would not the right hon. Gentleman agree that his assessment that the sanctions would lead to a swift collapse have proved completely wrong? As Rhodesian tobacco is reported to be selling strongly in Dutch and German markets, and now that we are looking forward to the restoration of normal relations, is it not appropriate to reconsider the sanctions, particularly as they are destroying goodwill to British trade in Rhodesia?

Mr. Bottomley: No, Sir. The information which the hon. Member has conveyed to me about the effectiveness of sanctions does not coincide with my judgment.

Mr. Thorpe: Will the Secretary of State confirm that there is no truth in the rumours that Her Majesty's Government either will lift or are considering lifting sanctions at any stage during the talks? Secondly, will the right hon. Gentleman confirm that he is looking into alleged breaches by British firms which have been brought to his attention?

Mr. Bottomley: The answer is "Yes" to both questions.

Mr. John Lee: Is my right hon. Friend now in a position to say how long he thinks it will be before sanctions have brought down the régime, which is what we on this side would welcome?

Mr. Bottomley: I cannot estimate the date, but I hope pretty soon.

Mr. Sandys: Can the right hon. Gentleman say how much the sanctions have cost us to date and what has been their effect on the British economy? If he is not in a position to answer off-the-cuff, will he consider issuing a detailed statement?

Mr. Bottomley: It is most disappointing that we get from the right hon. Gentleman questions of that kind which can only cause difficulties—[HON. MEMBERS: "Why?"]—difficulties which I inherited as a result of the right hon. Gentleman's policy.

Import Restrictions

Mr. Hector Hughes: asked the Secretary of State for Commonwealth Relations if he will make a statement on the relations between Her Majesty's Government and Rhodesia with special reference to the effectiveness of the restriction on imports to Rhodesia and his present and future plans in this respect.

Mr. Bottomley: Oil is the only commodity the import of which into Rhodesia has been restricted. As regards the effectiveness of this restriction, I would refer my hon. and learned Friend to the Prime Minister's speech in the debate on the Address on 21st April. The advisability of imposing further restrictions on imports to Rhodesia is always under review and, should the circumstances so demand, further action to this end will be taken.

Mr. Hughes: With regard to the first phrase of my Question, will my right hon. Friend take great care that, whatever negotiations take place, the British rule of law will be maintained so as to give equality of opportunity to all the citizens there regardless of colour?

Mr. Bottomley: I hope that the British standard of the rule of law will always be maintained.

Mr. Wall: Is it not clear that the right hon. Gentleman's estimate of the effect of the sanctions has been proved wholly wrong on more than two occasions? Would he not agree that it is equally clear that vital supplies are getting through to Rhodesia?

Mr. Bottomley: No, Sir. I still think that my judgment is far superior to that of the hon. Gentleman's.

Propaganda

Mr. Dempsey: asked the Secretary of State for Commonwealth Relations if he is aware that public representatives throughout the country are being subjected to propaganda in support of the illegal régime in Rhodesia by Rhodesians an.

South Africans; and if he will take steps to stop these activities.

The Minister of State, Commonwealth Relations Office (Mrs. Judith Hart): I naturally deplore the propaganda which has been circulated on this subject, but the British Government do not believe in suppressing freedom of speech and expression in this country. The good sense and understanding of the British people ensures that extravagant propaganda of this kind makes very little impact.

Mr. Dempsey: Does not my hon. Friend agree that at least she could negate these activities by in turn advising civic leaders, especially those in Scotland, of the effective steps which this Government are taking in an attempt to end the rebel régime in Rhodesia?

Mrs. Hart: I think my hon. Friend will agree that of all people the people of Scotland are the least susceptible to this kind of propaganda, but the facts speak for themselves, and indeed it is very valuable to have Questions from hon. Members on both sides of the House which enable us to draw attention to the intensity with which we are pursuing the sanctions policy.

Mr. David Steel: While appreciating that this propaganda cannot and should not be stopped, may I ask the hon. Lady to give publicity to the fact that air letters received by individuals in this country, apparently typewritten from individuals in Rhodesia, are often printed, stereotyped letters issued by the Rhodesian régime?

Mrs. Hart: Yes, indeed, this is so. The alternative would be to impose censorship, and this obviously we would not be prepared to do; but it is true that many of these are unacceptable to, and undesired by, the people who receive them.

Land

Mr. Faulds: asked the Secretary of State for Commonwealth Relations what progress has been made in the discussions with Rhodesian officials; and if he will now make non-discrimination in land allocation a precondition of any advance towards legal independence.

Mr. Bottomley: When announcing the start of the informal talks which are now continuing between officials in Salisbury,


the Prime Minister made it clear that no final settlement could be accepted which did not satisfy the six principles; these principles, of course, include the need for progress towards ending racial discrimination.

Mr. Faulds: Would my right hon. Friend please consider the possibility of abrogating or insisting on the abrogation of these Land Apportionment Acts before any agreement is reached with the rebellious régime? Under these Acts, the white Rhodesians, who are only 8 per cent of the population, have reserved for themselves 50 per cent. of the land. I am sure that he realises that this causes great resentment among the real Rhodesians.

Mr. Bottomley: What I said in answer to the original Question covers the supplementary question.

Mr. Speaker: Order. Some hon. Members are drifting back into the practice of asking long supplementaries.

Mr. Evelyn King: While welcoming some of the right hon. Gentleman's Answer, would he agree that the initiative towards Land Apportionment Acts came not from the white settlers but from the United Kingdom Government itself when the Labour Party was in office?

Mr. Bottomley: However the Acts came about, they cause racial discrimination, and I should like some day to see racial discrimination removed altogether.

Mr. Biggs-Davison: In considering the changes in the Land Apportionment Acts, would the right hon. Gentleman keep in mind the difficulties which would face African traders if they had to confront European competition?

Drug Supplies

Mr. Biggs-Davison: asked the Secretary of State for Commonwealth Relations whether he will now ensure that exports of antibiotics and other drugs, the lack of which is still causing suffering to sick of all races in Rhodesia, is not held up by sanctions; and whether he will make a statement.

Mrs. Hart: Licences are freely issued in response to applications for the export of manufactured drugs and medicines to Rhodesia. Normal Exchange Control requirements

apply and these require prepayment in a convertible currency other than sterling. There is no reason that there should be any hold-up in the supply of these commodities to Rhodesia.

Mr. Biggs-Davison: Since there is a hold-up, can the hon. Lady say where the hold-up lies and whose is the responsibility.

Mrs. Hart: No, I cannot, because there are no difficulties from the point of view of this country.

Major H. Bell

Mr. Nott: asked the Secretary of State for Commonwealth Relations what action he has taken on the claims of Major H. Bell, a former officer in the Rhodesian Army, for a refund of travelling expenses to the United Kingdom and loss of personal chattels which directly resulted from his refusal to support the illegal régime in Rhodesia.

Mrs. Hart: Arrangements are in hand for refunds to Major Bell in respect of his own and his wife's sea passages and certain other travelling expenses between Rhodesia and Britain. I regret that it is not possible for Her Majesty's Government to accept responsibility in regard to claims which officers may wish to submit for loss of personal chattels.

Mr. Nott: Does the hon. Lady make a distinction between compensation for losses incurred by loyal British subjects and losses incurred by foreign-owned pipelines? If not, can she or her right hon. Friend give an assurance that no compensation has been paid to the owners of the pipeline which runs from Beira and which suffered a certain loss of its earnings?

Mrs. Hart: I think that that is rather a different Question.

Mr. Nott: asked the Secretary of State for Commonwealth Relations what compensation he intends to offer for loss of office to those Rhodesian officers who lost their jobs as a result of their remaining loyal to the Crown at the unilateral declaration of independence and who have not been offered re-employment by Her Majesty's Government in the United Kingdom.

Mrs. Hart: None, Sir. As indicated in my right hon. Friend's reply to a Question by my hon. Friend the Member for Wellingborough (Mr. Harry Howarth) on 22nd December, provision already exists for assistance to such officers in other forms.

Mr. Nott: Is the hon. Lady aware that it was stated in a letter from her Ministry that Major Bell was considered by Her Majesty's Government as still serving the constitutional Government of Rhodesia? If that is so, does she not think that Major Bell should either still be on full pay or receive some compensation from the Government?

Mrs. Hart: My right hon. Friend described on 22nd December the very considerable assistance which the Government was prepared to give such officers. This includes the guaranteeing of salaries for six months and assistance in finding alternative employment. The hon. Gentleman has another Question down for Written Answer this afternoon and he may find further amplification there.

Talks

Mr. Fisher: asked the Secretary of State for Commonwealth Relations whether he will make a statement about the constitutional talks now taking place in Salisbury.

Mr. Bottomley: The contents of these talks are confidential, but I would ask the hon. Member to await the Answer which is to be given this afternoon by the Prime Minister to the hon. Member for Haltemprice (Mr. Wall).

Mr. Fisher: While I naturally do not want to press the right hon. Gentleman in any way which would be prejudicial to the eventual outcome, would he acknowledge that the public in both Britain and Rhodesia are naturally anxious to know whether there is any prospect of the preliminary talks developing into constitutional negotiations? Can he, therefore, give any idea at all as to the progress made so far?

Mr. Bottomley: I would ask the hon. Gentleman to await the Answer which my right hon. Friend the Prime Minister will be giving. Supplementary questions thereafter would perhaps be more appropriate.

Oral Answers to Questions — RHODESIA AND ZAMBIA

Transport Undertakings

Mr. Edward M. Taylor: asked the Secretary of State for Commonwealth Relations what information he has regarding the operation of transport undertakings managed jointly by Southern Rhodesia and Zambia.

Mrs. Hart: With permission, I propose to circulate a full reply in the OFFICIAL REPORT. But I shall be glad to answer now any specific point which the hon. Gentleman has in mind.

Mr. Taylor: While I am grateful to the hon. Lady for her reply, may I ask whether she can give an assurance that the Government will not encourage the Zambian Government to indulge in any policies which could lead to a crippling of this joint venture after normal relations have been restored?

Mrs. Hart: This is a matter of considerable difficulty for the Zambian Government. We regard it as a matter entirely for the Zambian Government itself to decide.
Following is the reply:
The two public transport undertakings operated jointly by Rhodesia and Zambia are Rhodesia Railways and, with Malawi, Central African Airways.
Rhodesia Railways has been operating at a loss and their position has been further aggravated by an acute shortage of cash in the Rhodesia section. The Zambian Exchange Control Authorities have refused to permit transfers of cash from Zambia to Rhodesia. Rhodesia Railways some weeks ago announced a new system of payments under which Zambian freight, carried over the Rhodesian section of the railway, would have to be paid for in advance. The Zambian Government obtained an injunction in the High Court of Zambia restraining Rhodesia Railways from enforcing its new charges. The Zambian Exchange Control Authorities issued instructions having the same effect. The illegal Board of the Reserve Bank of Rhodesia then issued contrary directions, under exchange control regulations introduced in Rhodesia since I.D.I., and sought an injunction in the High Court of Southern Rhodesia restraining Rhodesia Railways from disobeying these directions. The legal Board of the Reserve Bank of Rhodesia, under Sir Sydney Caine, took steps to dispute both the competence of the illegal Board and the validity of the regulations under which they were purporting to act. On 13th June, however, the action


brought by the Reserve Bank of Rhodesia was discontinued on the basis that the Railways would be subject to an order having the same effect issued by the Minister of Transport in the illegal régime in Rhodesia, under which freight from Zambia, through Rhodesia, may be impounded unless payment arrangements acceptable to the Rhodesian régime have been made. The Zambian Government, on 10th June, introduced Government regulations which will empower an Administrator of Railways, appointed by the President, to control the movement of locomotives, rolling stock and railway equipment from Zambia to Rhodesia.
It is understood that no copper is at present being railed from Zambia through Rhodesia and that some 8,000 tons of copper are at present held up on the Rhodesian section of Rhodesia Railways. Coal from Wankie is believed to be moving normally. The position regarding other imports from Rhodesia to Zambia is obscure.
The operations of Central African Airways have been curtailed as the result of the refusal of the East African Government to permit any C.A.A. aircraft registered in Salisbury to Operate in their territories.

Oral Answers to Questions — COMMONWEALTH RELATIONS

India Office Library

Dr. Gray: asked the Secretary of State for Commonwealth Relations what stage arrangements have reached regarding the future of the India Office Library.

Mr. Bottomley: The Commonwealth Relations Office announced last November that Britain, India and Pakistan had agreed to submit the question of the legal ownership of the India Office building and its contents as at August 1947, which, of course, includes the Library, to a tribunal of three judges chosen from the Judicial Committee of the Privy Council. It was stated that the choice of the judges and their terms of reference were the subject of confidential correspondence between the Governments concerned. This correspondence is still continuing.

Dr. Gray: Is my right hon. Friend aware that scholars throughout the world are extremely anxious about the India Office Library? Has he considered the possibility of setting up an international trust, or a Commonwealth trust, to administer its future with both India and Pakistan having places on the board? Is my right hon. Friend further aware that money for this would rapidly be available from many trusts and foundations?

Mr. Bottomley: I am sure my hon. Friend would agree that consideration of this matter must await the result of the tribunal, but I agree that nobody would wish to see this international institution in any way diminished in value.

Mr. Tilney: Would not the right hon. Gentleman agree that it would be a tragedy were the Library to be split up?

Mr. Bottomley: Yes, Sir.

European Economic Community

Mr. Henig: asked the Secretary of State for Commonwealth Relations what is Her Majesty's Government's policy towards the preferential trading arrangements which have been, or are being, negotiated by members of the Commonwealth with the European Economic Community, in so far as the interests of this country and the Commonwealth are concerned.

Mrs. Hart: Her Majesty's Government would naturally welcome arrangements which improved the terms on which developing Commonwealth countries could sell their products in the European Economic Community, provided that these Commonwealth countries were not required to give the Community, in return, trade concessions which were denied to Britain and other third countries.

Mr. Henig: Will my hon. Friend comment on the fact that Nigeria, in respect of certain products, is getting preferential treatment over and above that given to this country?

Mrs. Hart: That is not quite so. Details of the proposed agreement between Nigeria and the E.E.C. have not yet been published, and it is not possible to say at this stage what effect that agreement will have on the trade of Britain or other Commonwealth countries.

Commonwealth Consultative Space Research Committee

Mr. Geoffrey Lloyd: asked the Secretary of State for Commonwealth Relations what are the present activities of the Commonwealth Consultative Space Research Committee; and if he will make a statement.

Mrs. Hart: The Commonwealth Consultative Space Research Committee is


a private body with headquarters at the Royal Society, who provide the Secretariat. I understand that it is a consultative body, which aims to further Commonwealth co-operation in the field of space research, and has usually met when an international scientific meeting brings together Commonwealth representatives in this field.

Commonwealth Secretariat (Agreed Memorandum)

Mr. Geoffrey Lloyd: asked the Secretary of State for Commonwealth Relations what progress has been made by the Commonwealth Secretariat in implementing the recommendations of the Agreed Memorandum in the economic field.

Mr. Bottomley: The activities expected of the Secretariat were laid down by Commonwealth Prime Ministers collectively in their Agreed Memorandum of June, 1965. The Secretariat is now regularly servicing Commonwealth meetings and is carrying out its tasks in the other fields of activity laid down in the Agreed Memorandum. In the economic field the Secretariat has serviced two trade officials' meetings, the first in November and December and the second during May. It is currently servicing the meeting of Trade Ministers. The Agreed Memorandum envisaged that Commonwealth Governments would consider an annual report on the work of the Secretariat and the Secretary-General will no doubt so report after the completion of the first year of the Secretariat's work.

Mr. Lloyd: Can the right hon. Gentleman say whether there has been any progress with the imaginative proposal mentioned in the Agreed Memorandum which dates from the Commonwealth Prime Ministers' Conference of 1964, that there should be collaborative individual projects for Commonwealth countries in which various other Commonwealth countries and not merely the United Kingdom may play a part?

Mr. Bottomley: Yes, it is the intention that all Commonwealth countries, collectively and bilaterally, should do as much as they can together to further Commonwealth interests.

Oral Answers to Questions — GHANA

Discussions

Mr. Tilney: asked the Secretary of State for Commonwealth Relations if he will make a statement concerning his recent discussions with representatives from the Republic of Ghana.

Mr. Bottomley: Her Majesty's Government and other Western creditor Governments took part in a meeting with representatives of the Republic of Ghana on 1st and 2nd June. The meeting was of an exploratory nature and representatives of the creditors Governments undertook to report to their Governments that, in view of the grave economic situation confronting Ghana, the Ghana Government considered a temporary suspension of the service of the medium term debt to he essential. The creditor countries noted Ghana's assurance of her intention to pay her debts in full as soon as possible. Her Majesty's Government undertook to call a further meeting in due course.

Mr. Tilney: Now that Ghana has a sensible and sane Government, would Her Majesty's Government do all they can to help Ghana over her present and, we hope, temporary financial difficulties?

Mr. Bottomley: Matters concerning aid are, of course, for my right hon. Friend the Minister of Overseas Development. However, the hon. Gentleman may be aware of the announcement made last week, stating:
The British Government have agreed that approximately £3·4 million undrawn balance of the £5 million loan offered to Ghana in 1962 for the Volta Dam project should be applied to electricity distribution schemes connected with the Volta project. The detailed arrangements will be discussed shortly between the two Governments.

Oral Answers to Questions — ZAMBIA

Minister's Visit

Mr. Faulds: asked the Secretary of State for Commonwealth Relations if he will make a statement on the visit to Zambia of the Minister of State for Commonwealth Relations.

Mr. James Johnson: asked the Secretary of State for Commonwealth Relations whether he will make a statement


about the recent visit of the Minister of State far Commonwealth Relations to Zambia.

Mr. Biggs-Davison: asked the Secretary of State for Commonwealth Relations whether he will make a statement about the recent developments in AngloZambian relations.

Mr. Bottomley: The Minister of State visited Zambia in order to discuss with the Zambian Government the measures necessary to intensify sanctions against the illegal régime in Rhodesia and at the same time to maintain the Zambian economy in the circumstances resulting from the Rhodesia rebellion. Ways and means of maintaining copper exports from Zambia in the event of normal routes through Rhodesia being denied were fully covered in these discussions.

Mr. Faulds: Will my right hon. Friend please ensure that she returns if necessary to make sure that we sustain the economy of Zambia even more in the process of imposing sanctions against the rebel régime?

Mr. Bottomley: It is intended that my hon. Friend should return at an early date.

Mr. Biggs-Davison: Is it not the case that grave hardships are being inflicted on the people of Zambia by the sanctions imposed against the Rhodesian régime? [An HON. MEMBER: "The rebel régime."] The Rhodesian régime. Will the Minister realise that it is desirable, for the sake of Zambia, to bring this situation to an end as early as possible, and will the right hon. Gentleman also realise that people in this country want to help Zambia, but at the same time will be glad if the hate propaganda from Zambia ceases?

Mr. Bottomley: The desire of the Zambian Government and our own Government, and indeed of most people in this country, is to bring down the illegal régime in Rhodesia, and it is with this end in view that both Zambia and ourselves are prepared to make some sacrifices to bring that result about.

Mr. Thorpe: In view of the fact that about £10 million worth of Zambian copper has been illegally detained by the Rhodesian régime, and in view of the

court proceedings yesterday, will the right hon. Gentleman consider the possibility of a case stated to that court upholding or challenging the legality of the actions of the Rhodesian railways which have presumed to act on the illegal instructions of the Rhodesian régime?

Mr. Bottomley: We are considering the result of yesterday's decision in Rhodesia, and we will take account of that in due course.

Sir C. Osborne: asked the Secretary of State for Commonwealth Relations if he will make a statement on the circumstances of the failure of the Zambian Government officially to welcome the Minister of State at the Lusaka Airport on her recent goodwill mission.

Mrs. Hart: I was officially welcomed at Lusaka Airport by representatives of the Zambian Government.

Sir C. Osborne: Would the hon. Lady say what grade the civil servant was who met her? Was she not surprised at this act of gross discourtesy to her? Was any representation made by her Minister to the Government on this point.

Mrs. Hart: The hon. Gentleman is under some misapprehension about normal protocol in these cases. When Commonwealth Ministers arrive in any country, it is only sometimes that they are met by a Minister. When a Commonwealth Minister arrives here it is only sometimes that he is met by a Minister. I had very friendly discussions during the week and was seen off by two Ministers. [Laughter.] I make this point because the hon. Gentleman appears to attach an importance to it, which I do not. However, I am sure that he will be gratified to know that this was so.

Oral Answers to Questions — IRELAND

Frontier (Closure)

Mr. McNamara: asked the Secretary of State for Commonwealth Relations what representations he has received from the Republic of Ireland Government in respect of the closing of the Northern Ireland frontier with the Republic of Ireland on 16th-17th April; and what reply he has sent.

Mrs. Hart: None, Sir.

Mr. McNamara: May I ask my hon. Friend why the frontier was closed, and was not this a rather foolish thing to do, considering the improvement in relations between the north and south in Ireland.

Mrs. Hart: The measure taken by the Northern Ireland Government was necessary in their view for security reasons. I think it should be realised that the preservation of law and order in Northern Ireland is the responsibility of the Northern Ireland Government, and that it would not be proper for me to comment on their actions.

Mr. Chichester-Clark: Is the hon. Lady aware that the frontier was not closed, that in fact only one train did not run, and that the Minister for External Affairs in Eire said that if the same sort of circumstances prevailed at the same time he might well have taken the same action.

Mrs. Hart: I have read the proceedings in the Dail, and I can substantiate what the hon. Gentleman has said.

Trade

Mr. Hector Hughes: asked the Secretary of State for Commonwealth Relations what further steps he plans to ameliorate tax and import and export relations directed to increasing the flow of trade between Great Britain and Eire and Northern Ireland. respectively.

Mrs. Hart: I have nothing to add to the reply my right hon. Friend gave to an identical Question on 22nd February.

Mr. Hughes: Does my hon. Friend realise that that Answer does not carry the matter very much further, and does she realise that the economy of these two islands is greatly helped by free trade between both sections of the adjoining island and of this island?

Mrs. Hart: Yes, indeed, and our aim and that of the Government of the Irish Republic has been to remove as far as possible all the artificial obstacles to trade between the two countries. If my hon. and learned Friend has any specific suggestions that might assist in this objective, we would be very glad to hear from him.

Sir Knox Cunningham: Is the hon. Lady thinking of giving any further subsidy to Eire agriculture.

Mrs. Hart: This would not be a matter for me.

Oral Answers to Questions — MALAYSIA

Financial Assistance

Mr. Onslow: asked the Secretary of State for Commonwealth Relations what requests have been received from the Government of Malaysia for financial assistance; and if he will make a statement.

Mrs. Hart: We have received requests from the Government of Malaysia for aid for their economic development and also for the expansion of the Malaysian Armed Forces. The question of economic aid is one for my right hon. Friend the Minister of Overseas Development, but he has assured the Malaysian Government that our development aid will continue at about the same level this year as last—about £5 million. On defence aid about £2 million remains available from the 1963–65 grant of £14·5 million. We are also continuing to provide personnel on secondment and training facilities worth about £1·5 million in the current financial year.

Mr. Onslow: Has the hon. Lady any evidence to suggest that the Malaysians are remotely satisfied with the sum of money which the Minister has mentioned? Does she not realise that they are likely to ask this country for very much larger sums if we are pulling out of this area?

Mrs. Hart: I think that the Malaysians understand very clearly that our present economic difficulties have precluded our making any further grants for defence equipment. On development aid, we have every reason to suppose that they completely understand our position.

Oral Answers to Questions — AUSTRALIA

Immigrants and Capital

Sir D. Renton: asked the Secretary of State for Commonwealth Relations whether he is aware that the development of Australia will require large numbers


of immigrants and quantities of capital, which the people of Australia would rather obtain from the United Kingdom than from elsewhere; and what steps Her Majesty's Government are taking to facilitate this.

Mrs. Hart: I am aware that Australia is anxious to attract immigrants and capital from Britain. The flow of migrants to Australia has increased in recent years. It was about 77,000 in 1964 and some 90,000 in 1965. We have no plans to stimulate a further increase. As regards capital, my right hon. Friend the Chancellor of the Exchequer explained in his Budget speech why it has become necessary for the time being to slow down the flow of investment to developed countries in the sterling area, which includes Australia.
I should like to take this opportunity of acknowledging the understanding with which the Voluntary Programme has been received by the Australian Government.

Sir D. Renton: Although the first part of that Answer is more or less satisfactory, will the hon. Lady bear in mind that tremendous economic expansion is taking place in Australia, in which the Australians would like us to play a part? Would she use all her endeavours to see that we resume our part as soon as possible.

Mrs. Hart: Indeed, but I think that the right hon. and learned Gentleman is fully aware of the difficulties which stand at the moment in the way of doing this.

Mr. Fisher: Would the hon. Lady agree to acknowledge that her Government's attitude is still one of somewhat hostile neutrality towards emigration to Australia? Does the Overseas Migration Board still exist? If so, how many times a year does it meet, and does it ever make any policy recommendations to her right hon. Friend.

Mrs. Hart: The hon. Gentleman will find that a statement is to be made later today covering some of what he has said.

Oral Answers to Questions — NIGERIA

British Property

Mr. Tilney: asked the Secretary of State for Commonwealth Relations what damage has been done to British

property in Nigeria during the recent riots; and whether any British citizen was hurt.

Mr. Bottomley: There have been no reports of damage to British property in the north of Nigeria during recent riots apart from incidental damage to filling stations owned by the British Petroleum and Shell Companies and to some cars and personal property of individuals. No British subject suffered any injury.

Mr. Tilney: Would the bight hon. Gentleman agree that it is a major British interest that Nigeria should remain united and that law and order should prevail there?

Mr. Bottomley: Yes, Sir, Her Majesty's Government, of course, attach great importance to the stability and progress of all Nigeria as a sister country of the Commonwealth and would strongly deprecate any development tending to obstruct the efforts of the Nigerian Government in maintaining cohesion in that country.

Oral Answers to Questions — COAL

Winter Fuel Supplies

Mr. Peyton: asked the Minister of Power to what extent supplies of solid fuel, particularly house coal and boiler fuels, will be adequate to meet demands next winter.

The Minister of Power (Mr. Richard Marsh): This is a matter which I keep under close review with the National Coal Board. The present seamen's strike could affect the position, but it is as yet too early to say to what extent.

Mr. Peyton: Would not the right hon. Gentleman agree that the currently accelerating manpower fall-away, now reaching about 1,000 a week, is likely to have disastrous consequences for next winter? Would he not, therefore, agree that if this contracting industry is unable to meet even its established markets the crisis which we will face next winter will be one of very great proportions indeed?

Mr. Marsh: The hon. Gentleman does not help the position by talking about a disastrous situation. The fall-away in the manpower of the coal mining


industry is considerably more than we would like to see, but it does not produce evidence of a disastrous situation next winter. There are a number of factors which we must consider at present, but there is no evidence as yet to suggest that there will be a disastrous situation in this sphere next winter.

Mr. Harold Walker: Is my right hon. Friend aware that in the first eight weeks of the current year, 1966–67, output in the coal mining industry fell by 1½ million tons compared with last year's figures, that the manpower decline has been accelerating, that productivity is only 3 per cent. up, that his complacency is unjustified and that he should, therefore, review the proposed pit closures.

Mr. Marsh: My hon. Friend should remember that this must be kept in proportion. There is an intention to reduce the total manpower within the coal mining industry. The run-down of manpower in the industry is faster than one would wish to see at this time. However, we must remember that there is this desire to contract the industry and I hope that I shall be in a position to say something more on the prospects for next winter before the House rises for the Summer Recess. It would be stupid and very much against public interest for people to go around talking about disaster in terms of coal supplies next winter.

Sir G. Nabarro: Has the right hon. Gentleman observed that the output in the last coal year, which ended on 31st March, was the lowest in our history, at 186 million tons, and that, pro rata with the first eight weeks of the new coal year, output is down to 170 million tons, which is far, far below the level of industrial and domestic demand combined? Would he, therefore, cast out complacency in this matter?

Mr. Marsh: There is no question of complacency at all. This whole question of fuel supplies generally, not just coal, is a very real and crucial one. A great deal of work is taking place in my Ministry now in an effort to work out the best way of, for example, taking account of the new supplies of North Sea gas, which represent a contribution in terms of coal equivalent. I am merely saying that there is no evidence to justify statements to the effect that there will be a disastrous position next winter.

Mr. Peyton: In view of the unsatisfactory nature of the Minister's reply, I beg to give notice that I shall raise this matter on the Adjournment.

Pithead Costs

Mr. Alison: asked the Minister of Power what was the operating pithead cost per ton of saleable coal produced, for the eight divisions, respectively, of the National Coal Board, in 1965–66 or the nearest available year.

Mr. Marsh: The latest annual figures are published in Table 2 of the Board's Annual Accounts of 1964–65.

Mr. Alison: In view of what the Minister has said about his policy towards economic pits, will he arrange that those pits which are economic will be able to sell their coal at that economic price, particularly coal from the Yorkshire coal fields and with special reference to the export of such coal from Immingham and Hull?

Mr. Marsh: We have already accepted the policy, with a certain amount of disagreement, that there should be differential coal prices in this country. On the other hand, one has to accept that we cannot have too great differences between coal prices in various parts of the country.

Mr. Shinwell: On this matter of economic pits, is my right hon. Friend aware that we could make any pit economic in this country if we raised the price of coal?

Mr. Marsh: One has to take into account cost rather than price in this, and also the social effects. The fact is, as everyone accepts, that there are pits in this country which can provide us with the coal we need and with a coal mining industry which is viable in the interests of the country. There cannot be a future for the coal mining industry on the basis of trying to average up the prices of economic pits to cover those which are. uneconomic.

Mr. Barber: Will the Minister carry, on with that policy and continue to ignore the advice which he receives from his right hon. and hon. Friends?

Mr. Marsh: The right hon. Gentleman is being even less helpful than usual.

National Coal Board (Powers)

Mr. Braine: asked the Minister of Power what plans he has to introduce legislation to give greater powers of diversification to the National Coal Board.

Mr. Marsh: The board's existing powers are already wide, but I am considering the need for extending them.

Mr. Braine: Is the right hon. Gentleman aware that the National Coal Board has been investing public money in the building supplies industry, including an American-controlled firm? Under what powers can the board do this, and when did Parliament give approval to this creeping nationalisation?

Mr. Marsh: If the suggestion is that the board is acting illegally, the hon. Gentleman should raise the point. If the suggestion is merely that the board is using its initiative within the confines of its remit, I should have thought that this was wholly admirable.

Oral Answers to Questions — MINISTRY OF POWER

Power Stations (Generating Capacity and Coal Firing)

Mr. Peyton: asked the Minister of Power what is the total of new generating capacity planned for the next 10 years; and what proportion of this will be coal fired.

Mr. Marsh: The Central Electricity Generating Board plans to commission 27,000 megawatts in England and Wales in the next five years, of which nearly 70 per cent. will be coal fired. Its provisional estimate for the following five years is 25,000 megawatts, but plans for the period are not settled and the proportion of coal fired plant is a matter yet to be decided.

Mr. Peyton: While I admit that the Minister has some difficult problems to solve here, does he not think that it would be wise to look at this matter with a view to reducing the proportion of power stations or new capacity which is wholly dependent on coal firing, particularly in view of the fact that his answers to supplementary questions on the previous Ouestion lend weight to this suggestion?

Mr. Marsh: The Central Electricity Generating Board's plant programme for the next five years is already committed. The size of the programme for the second five years will depend on the trend of electricity demand. In the Ministry of Power we are now looking at the whole question of fuel supplies in terms of producing various interactions of different types of fuel to find out the future picture. However, any suggestion that the British coal mining industry is withering away is absolute nonsense and does very real damage to the interests of this country.

Mr. Alison: Is my right hon. Friend aware that the C.E.G.B. is already expressing misgivings about the assurances that have been given that it will get sufficient suitable coal for burning in coal-fired power stations? If such misgivings are being expressed now, what is the position likely to be in 1970? Does my right hon. Friend have plans for the conversion of stations to alternative fuel burning in the present generation?

Mr. Marsh: There is no reason to suppose that the C.E.G.B. will not be able to obtain the coal it requires. No representations to the contrary have been made to me.

Oil Industry

Mr. Palmer: asked the Minister of Power if he will introduce legislation, after due inquiry into ways and means, to provide for a greater degree of State interest and control in the oil industry on the lines already being followed in the mixed economies of other West European countries.

Mr. Marsh: I have no plans for such legislation.

Mr. Palmer: Does not my right hon. Friend agree that there is not very much hope of getting a balanced fuel and power policy in this country until the whole question of control of the oil industry is looked into? Will he make a new start in his Ministry and look at some of the experience of Western Europe generally in this matter?

Mr. Marsh: It is true that some European countries, particularly France and Spain, exercise more control over their oil


companies than we do in this country. However, others, including Germany and the Netherlands, have policies similar to our own. I am not making any pronouncement on what the long-term policy should be, but merely saying that we are at the moment reviewing the whole question of fuel and power policy in the light of new developments; but there are no policies at the moment which give rise to the sort of legislation mentioned by my hon. Friend in his Question.

Mr. Lubbock: Is the hon. Gentleman aware that the British oil refining industry is capable of very substantial economies of scale and that at present refineries with a throughput as small as 2 million to 3 million tons are being constructed in Britain? Will he consult the President of the Board of Trade with a view to the I.D.C. procedures being used to prevent the construction of oil refineries with a smaller throughput of 2 million and 3 million tons per annum.

Mr. Marsh: The hon. Gentleman's question about I.D.C. procedures is, of course, a matter for my right hon. Friend the President of the Board of Trade. It is a fact that United Kingdom refinery output did not cover inland demand of bunkers last year, but this should be put right as planned capacity comes on stream.

Coal Industry and North Sea Gas

Mr. Palmer: asked the Minister of Power what advice has been tendered to him by his Energy Advisory Council on the accelerated running down of the coal industry and the finds of North Sea natural gas.

Mr. Marsh: The Energy Advisory Council met last week to take stock of these and other developments. The proceedings of the Council are confidential, but I shall take account of the opinions expressed in my review of fuel policy.

Mr. Palmer: Is my right hon. Friend satisfied that he is likely to get the right sort of objective advice from the Energy Advisory Council since it is mainly made up of the chairmen of the nationalised industries? Is it not a fact that they are likely to be fairly well divided among themselves?

Mr. Marsh: It is true that there is certainly no totalitarian unanimity of

opinion among them. On the other hand, the purpose of an advisory committee is to advise. This Council does produce information which will be of very great value to us in the formulation of our fuel policy. We will take our own decisions, but the advice which the Council has tendered is important and will be taken into account.

Mr. Mendelson: While my right hon. Friend is resisting any exaggerated analysis, would he not agree that, in view of the larger number of people leaving the pits, it is now time for him to halt the accelerated pit closure programme?

Mr. Marsh: With respect to my hon. Friend, the problem is rather more complicated. It is not only a question of how many people leave the pits but of which pits they leave. I believe that there is a very real future for a coal mining industry based on economic pits. [Interruption.] I make this point seriously. The big problem to be faced here is how we can maintain a viable coal mining industry, not on the basis of social or sentimental reasons but because the economy of this country needs a coal mining industry of a certain size.

Selective Employment Tax (Fuel Distribution Costs)

Mr. Pavitt: asked the Minister of Power what arrangements he has made to re-examine the effect of the proposed Selective Employment Tax on the retail distribution of fuel.

The Parliamentary Secretary to the Ministry of Power (Dr. Jeremy Bray): My right hon. Friend is currently considering representations from the Chamber of Coal Traders about the effect of the tax on their trade.

Mr. Pavitt: Has my hon. Friend had any estimate made of the possible amount per ton increase in the price of coal, and will he consider making representations that all publicly-owned coal distribution should be free of the tax?

Dr. Bray: I understand my hon. Friend has a Question about the cost of the tax to the retail coal trade down for answer on 21st June.

Mr. Maxwell-Hyslop: Is the hon. Gentleman the only person left who cannot see that it is bound to put up the cost of living?

Dr. Bray: The purpose of the Selective Employment Tax is a matter for the Chancellor of the Exchequer.

Electricity Generation (Natural Gas)

Mr. Alison: asked the Minister of Power what research and development projects he has initiated to improve the efficiency of power stations as users of natural gas for electricity generation.

Mr. Marsh: None, Sir. The technology is already known, but the electricity supply authorities have work in hand on particular aspects.

Mr. Alison: Has not the recent boom in natural gas indicated the enormous urgency of developing some sort of research programme, particularly in the light of the possible rundown of coal supplies?

Mr. Marsh: At the risk of becoming tedious, I must make the point again. It is an important matter. All the evidence is that there is a future in this country for a large coal mining industry as the biggest supplier of primary fuel and probably the biggest coal mining industry in Europe. When talking of rundown, this is a very relative thing. As regards research and development in this particular field, the technology is already well known.

Oral Answers to Questions — OVERSEAS DEVELOPMENT

U.N.E.S.C.O. (Literacy Programme)

Mr. Frank Allaun: asked the Minister of Overseas Development if he will make available one day's arms expenditure, £5,750,000, to the United Nations Educational, Scientific and Cultural Organisation in order to combat illiteracy in the world.

The Minister of Overseas Development (Mr. Anthony Greenwood): No, Sir. I would refer my hon. Friend to the reply my hon. Friend gave to my right hon. Friend the Member for Derby, South (Mr. Philip Noel-Baker) on 19th May.

Mr. Allaun: But is it not a fact that our total contribution to U.N.E.S.C.O. for all purposes is only £570,000 a year, precisely one-tenth of one day's arms expenditure? Surely, if a poor country

such as Iran can help in this way, Britain can at least do the same?

Mr. Greenwood: My hon. Friend should remember that, in addition to the contribution we are making to U.N.E.S.C.O.'s World Experimental Literacy Programme, we have also offered to collaborate with a developing country of the Commonwealth in a literacy project. We have to preserve a sense of proportion about these things, realising that our bilateral contribution to educational development, if we include the work of the British Council on educational development, will this year be somewhere between £16 million and £17 million, which is about three days' arms expenditure.

Mr. Speaker: Order. I hope that we can get back to short questions and short answers.

MINISTER OF ARMAMENTS

Viscount Lambton: asked the Prime Minister whether he will appoint a Minister of Armaments to supervise the sale of arms abroad.

The Prime Minister (Mr. Harold Wilson): No, Sir.

Viscount Lambton: But will not the Prime Minister agree that undiverted attention should be given to this matter to make certain that, directly or indirectly, arms do not reach countries with interests at variance with our own?

The Prime Minister: The noble Lord's objective is right, but I draw a sharp distinction between the private traffic in arms, which has had some dangerous consequences in recent years, and the duties of the newly appointed arms salesman whose job is to see that, within already agreed programmes, for example, between allies within N.A.T.O., British products have a fair crack of the whip instead of the excessively pushed American arms sales which have been driving us out of markets we ought to have.

LIFE PEERAGES ACT, 1958

Mr. William Hamilton: asked the Prime Minister if he will now introduce legislation to repeal the Life Peerages Act, 1958.

The Prime Minister: No, Sir.

Mr. Hamilton: Does not my right hon. Friend think that this party has gone on long enough? Does he think that we are within miles of achieving the objectives when the Act was introduced, and, if he thinks that we are, how can he possibly justify the appointment in the last list but one of so many political "dead-beats" and election rejects?

The Prime Minister: I do not think that it is either the practice or constitutional to discuss in the House individual recommendations to Her Majesty. I should have thought that recent lists have abundantly justified the Act and have shown that it can be used, with some degree of imagination, with usefulness to both Houses.

HOUSE OF COMMONS (SPECIALIST COMMITTEES)

Mr. Wall: asked the Prime Minister if he will now make a statement on his proposals for the setting up of new specialist committees of the House.

The Prime Minister: No, Sir, but discussions with the Opposition have now begun and I will make a statement when they have been completed.

Mr. Wall: When were discussions with the Opposition actually begun? Will the Prime Minister agree that, as the House finds its difficult to give enough time to debate matters like foreign affairs and defence, he ought to consider setting up specialist committees on these two important subjects?

The Prime Minister: I do not want to anticipate what might come out of these discussions. There was considerable delay between the Gracious Speech and our being in a position to talk to the Opposition, and then, of course, we had the Recess. We have now started talks, but I do not want to say what is likely to come out of them, particularly as regards specialist committees of this kind.

Mr. Heath: The Prime Minister will recognise that the House will be pleased that the meeting we had with him half an hour ago has enabled him to give this interim reply. We now look forward

to the detailed proposals which will come from him as a result of our fruitful discussion.

The Prime Minister: I am sure that they will be very fruitful discussions. I have twice taken responsibility for the delay between the Gracious Speech—with the Recess—and commencement of talks. We could have made an approach during the Recess but for the, I am sure, very valuable visit of the right hon. Gentleman to America.

RHODESIA (TALKS)

Mr. Wall: asked the Prime Minister if he will now make a statement on the discussions with officials of Mr. Smith's Government.

The Prime Minister: The informal talks with officials of the illegal régime are continuing and I have, as yet, no statement to make.

Mr. Wall: I am much more concerned about the results of these talks than about the timing, but can the Prime Minister say whether he expects to be able to make a statement on the conclusion of the talks before the long Recess?

The Prime Minister: No, Sir. As the hon. Gentleman says, the important matter is the right conclusion and one which is acceptable to the House as being fully in accordance with the six principles and the other conditions which have been laid down. I think that I should probably be wrong in trying to forecast the time. We want to get the right result more than, perhaps, a quick result.

Mr. Thorpe: On a point of order, Mr. Speaker. May we know how it is possible for this Question with its reference to "Mr. Smith's Government" to have got past the Table Office?

Mr. Speaker: That is something I shall have to look into.

Mr. John Lee: Will my right hon. Friend bear in mind that many of us on this side of the House regard these negotiations with grave concern and we think that no good can possibly come out of having anything to do with this treacherous régime?

The Prime Minister: In my opening Answer, I did not use the word "Government", of course; I used the term "illegal régime". In our view, these talks, which are talks, not negotiations, as my hon. Friend calls them——

Mr. John Lee: What is the difference?

The Prime Minister: They are talks to discover whether there is a basis for negotiations. They are talks to see whether there is a basis for negotiation, on what terms, and with whom.

Mr. Heath: We have always urged that these talks should be carried on on a confidential basis and, naturally, we wish them well; but I think that the House would like to feel that, before it rises for the Summer Recess, it might be possible for the Prime Minister at least to give some indication of how the talks are proceeding.

The Prime Minister: I think that the whole House would like to feel that, before that time, we shall have an outcome and a satisfactory outcome; but this cannot be guaranteed. I do not want to prejudice them, but I think that the House would be entitled to a statement either on the outcome or to say why it is not possible to reach an outcome by that time.

Mr. Michael Foot: Will my right hon. Friend go a little further than that? While all of us on this side of the House at least are extremely gratified to hear of his insistence, so strongly made, on the six principles, will my right hon. Friend give an undertaking that, before these unofficial talks are made official in any way, there will be a chance for the House to debate the whole proposition which the Government propose to make in the official talks themselves?

The Prime Minister: The statement that I made about the six principles I have made on every occasion when we have discussed the matter. I made it clear at the beginning when these talks began. Certainly, before there were any question of moving from informal and exploratory talks to anything which might be negotiations, by which time we should know with whom they would be, there would be a statement in the House. Whether it would then be debatable is, of course, a matter for discussion

through the usual channels and announcement by my right hon. Friend the Leader of the House.

Rear-Admiral Morgan Giles: As a contribution to the success of these talks, which I am sure we all desire, will the Prime Minister consider urging his right hon. Friend the Secretary of State for Commonwealth Relations to moderate the language in which he habitually refers to the elected régime in Rhodesia?

The Prime Minister: The hon. and gallant Gentleman is quite wrong. This is not an elected régime. It is an illegal régime. It was an elected Government; it was the legal Government. It committed an illegal act and was dismissed on the authority of Her Majesty the Queen. I should have thought that hon. Members opposite would at least have understood the constitutional position involved.

SEAMEN'S DISPUTE

Mr. Kenneth Lewis: asked the Prime Minister what action he will take, following his meetings with representatives of ship owners and seamen, to mitigate the effects of the seamen's strike upon the British economy.

The Prime Minister: As the Answer is rather long, I shall, with permission, give it after Questions.

ATLANTIC NUCLEAR FORCE

Mr. Bruce-Gardyne: asked the Prime Minister which Ministers are responsible for carrying out the policies of Her Majesty's Government regarding the Atlantic Nuclear Force.

The Prime Minister: Decisions concerning the nuclear organisation of the Atlantic Alliance are a matter for the Government as a whole. Responsibility for carrying out this policy rests primarily with my right hon. Friends the Secretaries of State for Foreign Affairs and Defence as appropriate.

Mr. Bruce-Gardyne: Before the Prime Minister hands over responsibility for this particular item in his bag of tricks, can he give a simple answer to a simple


question? Is it still the intention of Her Majesty's Government to achieve early allied agreement on the Allied Nuclear Force?

The Prime Minister: The simple answer to the hon. Gentleman is, "Yes, Sir." But he will also understand[HON. MEMBERS: "Ah:"]—the simple answer is "Yes, Sir." He will also understand that in the last two or three meetings of N.A.T.O. we have had other and more urgent matters to deal with.

AUSTRALIA (FOREIGN POLICY AND DEFENCE)

Mr. Mayhew: asked the Prime Minister what representations he has received from the Prime Minister of Australia about the Government's foreign and defence policies in the Far East in the 1970s; and if he will make a statement.

Mr. Grimond: asked the Prime Minister what undertakings have been given to the Australian Government about British defence contributions east of Suez; and if he will make a statement.

Mr. Blaker: asked the Prime Minister what assurances have been given to the Government of Australia about the intention of Her Majesty's Government to continue to maintain a military presence in the Far East and Southern Asia.

The Prime Minister: Communications between the Prime Minister of Australia and myself are confidential.

Mr. Mayhew: Does the Prime Minister recall the public declaration of my right hon. Friend the Secretary of State for Defence in Canberra in February explaining the defence decisions and stating that we intended to maintain all our commitments and to remain in the military sense a world Power, not only between 1970 and 1980, but also to some extent between 1980 and 1990? Does this public declaration, a copy of which is in the Library, represent British policy?

The Prime Minister: Yes, I am aware of the statement of my right hon. Friend. It represents our position, but I have no doubt that my hon. Friend the Member for Woolwich, East (Mr. Mayhew), who

has suddenly started to show very great interest in these matters—[HON. MEMBERS: "Oh."]—our whole policy on defence was stated in the White Paper of 1965 as well as the White Paper of 1966—will have a chance in the next few days of hearing further about these matters and so, I hope, in due course will the House.

Mr. Grimond: Is the Prime Minister aware that if that statement represents Government policy, as he has categorically assured us it does, it means that the Government are committed to a major role in the Far East for an indefinite period so long as the people there want us to remain? Will he make sure that this is not contradicted by statements made by leading Ministers in any other context, because it is clear that this Government announcement will cause grave disquiet among many people in this country?

The Prime Minister: I will certainly ensure that any announcements—and if I catch my right hon. Friend's eye, I may be making statements in the context referred to by the right hon. Gentleman—are not inconsistent with the policies which we have announced. What the right hon. Gentleman and many who have approached this problem have not seen, because it has been so much oversimplified with slogans about east of Suez, is that if we are to play a part in world peacekeeping for the United Nations, we must have a role there. The argument will be about the extent of our commitments in terms of bases and the number of troops and other services which we keep abroad. The important thing if we are to exercise a peacekeeping role is above all the ability to get there, and this means having some presence there.

Mr. Blaker: Is it not possible that one reason for the anxiety shown by the Australian Government is that the British Government have changed their mind on so many aspects of foreign policy and defence in recent months that they may have given the impression to their friends of infirmity of purpose?

The Prime Minister: I do not think that that impression has been given to anybody apart from hon. Members opposite who have been trying to believe this for


about twelve months. Our position not only in the Far East but also in the Middle East has been well understood by our friends in Australia and New Zealand throughout this period. We had the Defence Review and decisions were taken and were discussed with our Commonwealth partners and our allies and were fully understood by them.

Mr. Paget: Will my right hon. Friend tell me how on earth we carry out a genuine world role in a distant ocean without a carrier force?

The Prime Minister: This matter has been debated in the House of Commons for some three days. I should have thought that my hon. and learned Friend knew the answer to that. There will be an opportunity for going into these subjects a little more fully in the near future.

Mr. Heath: Is it not clear that the present action of the Government in making one set of statements to Governments east of Suez and exactly contradictory sets of statements on foreign policy in party meetings upstairs is undermining the faith of the world in British foreign policy everywhere and, when allied to the breaches of faith over the surcharge, over Aden and now over E.L.D.O., means that there is no longer respect for the Government of this country?

The Prime Minister: The right hon. Gentleman should be careful not to confuse Parliamentary Labour Party meetings with the 1922 Committee. Whether the leaks from the 1922 Committee are as inaccurate as those from our party meetings I am not in a position to say, but there has been no question of saying different things to our allies in public or private from what has been said at party meetings or anywhere else.

Mr. Heath: Is the Prime Minister repudiating the verbatim account of the party meeting by his hon. Friend the Member for Bosworth (Mr. Wyatt) in the Daily Mirror?

The Prime Minister: Yes, Sir.

Mr. William Hamilton: Can my right hon. Friend give an assurance that the implementation of this policy east of Suez will in no way jeopardise the targets set out in the National Plan?

The Prime Minister: I can certainly do so, because the Defence Review was planned within a total of £2,000 million and not the much more fantastic figures for which right hon. Gentlemen opposite are pressing, and included the figures which were quoted in the National Plan. The two are completely consistent with one another.

Mr. Braine: In considering these matters, will the Prime Minister bear in mind the close ties of blood and sentiment and economic interests which bind our country with Australia and New Zealand? Will he also bear in mind that in times of difficulty Australia and New Zealand have never hesitated to cross half the world in order to assist us, and will he therefore clearly recognise that a moral obligation rests upon us to do the same?

The Prime Minister: Yes, Sir. We fully recognise all these matters within the limitations set out in the Defence White Paper, which means that we shall play our part to the full extent of our resources. But what we are not going to do is to do what some right hon. Gentlemen opposite keep telling us to do, which is to become a world policeman capable of action in a major role in all parts of the world.

Earl of Dalkeith: Is it not a fact that if the Government carry on as at present the country will very soon not be able to afford any defence east of Margate?

The Prime Minister: No, Sir. One of the purposes of the Defence Review was to see that we should accommodate defence expenditure at home and abroad within a total which was possible to the country and not break the country's back with the kind of projects which nearly brought the country to financial ruin two years ago.

SEAMEN'S DISPUTE

The Prime Minister (Mr. Harota Wilson): With permission, Mr. Speaker, I will now answer Question No. Q6.
Before I deal with the safeguarding of supplies and the maintenance of essential services, I would like to bring the House up to date following my right hon.


Friend the Minister of Labour's Statement yesterday. As the House will know, the Finance and General Purposes Committee of the Trades Union Congress saw my right hon. Friend last evening and he and I will be meeting them this afternoon.
Before the Recess the House approved Regulations made under the Emergency Powers Act following the Declaration of Emergency made by Her Majesty the Queen. The House was told then that we should not hesitate to use any powers necessary to maintain essential supplies and services should the need arise.
In fact, we have not so far had to take action under the Regulations because while serious difficulties have arisen in certain parts of the country, particularly the islands dependent on sea transport, there has so far been little interference with the main flow of essential supplies for this country. We are, however, watching very carefully the question of raw material supplies to Northern Ireland and also the maintenance of essential exports. I will ensure that the House will be kept informed of any action that may be necessary.
Meanwhile, we are keeping a day-to-day watch on the situation in the individual ports, in some of which congestion is now beginning for the first time to become more serious, and as soon as action needs to be taken the House will, of course, be informed.
While the Government will take whatever action is needed, the real solution to these problems and the threat posed to the British economy must be a solution of the dispute. As the Government stated last Thursday, and as my right hon. Friend the Minister of Labour repeated in the House yesterday, we believe that the recommendation of the Court of Inquiry provides a fair settlement and an honourable solution to the present dispute in the interests of the seamen, the shipping industry and the nation.

Mr. Grimond: Is the Prime Minister aware that in the islands to which he has referred the difficultie4 are becoming crippling?

Mr. Kenneth Lewis: On a point of order. The Question is in my name, Mr. Speaker, and I rose to be called.

Mr. Speaker: I am sorry, but I did not see the hon. Gentleman. I will call him next.

Mr. Grimond: We are now in the position of an inland county blockaded by road and rail. While I appreciate that the solution to all this is a settlement of the strike, will the Prime Minister bear in mind that many of the results to the islands will continue long after the strike is over? Will he see whether there are some measures which can be taken to ameliorate the substantial damage suffered by islands all round the coast even if the strike is settled now?

The Prime Minister: I readily give that assurance. We have been watching the position of certain islands and those represented by the right hon. Gentleman have had some of the greatest difficulties. I also agree that as soon as the strike is settled there will still be a continuing problem. We shall do everything in our power to help.

Mr. Kenneth Lewis: May we have an assurance from the Prime Minister that there will be no concession beyond the proposals of the Court of Inquiry, since those in themselves would damage the economy more? Secondly, would the Prime Minister consider, in the long term, in the light of what has happened in recent weeks, whether, to prevent something similar from happening in the future, he will now, as his right hon. Friend the Minister of Labour has done with the Pearson inquiry, give us an interim report from the Royal Commission on the Trade Unions and Employers' Associations so that we can make sure that some action is taken to improve labour relations generally?

The Prime Minister: The last matter is for the Royal Commission itself, of course. The important thing to realise, and I am sure that the House does, is that one is here dealing with people who have very strong feelings and passions arising, in the example of the seamen, out of 20 or 30 years in which these problems were not adequately dealt with. I do not want to prejudice this, but I am not certain whether legislation would deal with the question which the hon. Gentleman has in mind.
As for his first question, I would like not to add to my statement, since my right


hon. Friend and I are to meet representatives of the T.U.C. this afternoon, but I repeat, as my right hon. Friend did yesterday, that we regard the terms of the Pearson Report as being the right answer to this problem.

Mr. Hector Hughes: In exercising the powers to which he has referred, will the Prime Minister see that they are not exercised to the prejudice of the seamen and that the seamen are treated as well as all other persons in the community who have had increased incomes?

Sir A. V. Harvey: The right hon. Gentleman referred to imports but did not say anything about exports. Can he say to what extent British exports are getting away?

The Prime Minister: I referred to exports. I said that we were watching very closely.

Sir W. Bromley-Davenport: Watching!

The Prime Minister: Not only watching essential exports, but giving active help wherever we can where there is danger of their being held up. The problem is the bulky exports. We are considering at the moment possible further action for helping any exports which are held up.

Mr. Orme: Is the Prime Minister saying, in effect, that the Pearson Report should be the basis of a settlement and not the basis of debate? Is he saying that there is no give at all within the terms of the negotiations? If so, he will exacerbate the position even more.

The Prime Minister: I have already said that I do not think that there would be any advantage in my adding to the words which I have used. The position, however, is, as the whole House knows, that throughout the National Union of Seamen has made it plain that it must have its claim 100 per cent. and it has shown no willingness to negotiate on anything less than that. That has been the position.
We believed that the right answer lay in the Report of the Court of Inquiry. That could have been the basis for negotiation in the sense that there were many consequential things which needed to be done in productivity and overtime. Of course there would have been negotiations,

but we believe that the broad outline of the Report represented a fair and honourable settlement and was in the interests of the seamen themselves as well as the nation, and that it was a great mistake not to accept it straight away.

Mr. Peyton: The Prime Minister referred to essential exports. Would he say what he meant by that? Are they not all essential?

The Prime Minister: My use of "essential", as I made clear, was in terms of value. Some are very bulky. A great deal of shipping space or air space is used to get two or three motor cars away, and it is this area which gives most anxiety. In the same space one can ship far more valuable exports. Therefore, in terms of the cost effectiveness of the export drive, not all exports are equal.

Mr. Heller: Would not the Prime Minister agree that, while this is a very delicate situation, the essence of the immediate problem is to reach a basis for settlement? Would he not agree that the important thing is to get some concession on the subject of leave and that this is a matter which is greatly concerning the National Union of Seamen? We must face the fact that the last word about concessions has not been said.

The Prime Minister: Without going too far beyond what I have already said, I think that right from the start, when my right hon. Friend and I met the seamen before the strike began, it was absolutely clear that nothing on earth would stop the strike because the seamen had such a long record of grievances. Their argument and slogan was a 40-hour week.
The Court of Inquiry has given them a 40-hour week in a period of 12 months from now, in addition to what they got last year. That seems to us to be reasonable and honourable and should be accepted. Other questions, of course, will be brought up from time to time. There are many other grievances which need to be settled in the course of the next year or so as a result of the further work of the Pearson Inquiry. But I am bound to say that we have so far seen no give, or suggestion of give at all, from the National Union of Seamen other than the basis of 100 per cent. acceptance of its claims.

Mr. Heath: Will the Prime Minister recognise that, so long as there are hints and vague rumours of further concessions beyond the compromise put forward in the Pearson Report, the strike will continue, because those who wish to push further will maintain their influence? Therefore, will he be absolutely clear and firm on the statement that the recommendation of the Pearson Report is a fair settlement and not the basis for further negotiation? Will he also recognise that this in itself can be inflationary and undermine the Government's incomes policy unless the union gives and carries out an undertaking to reduce overtime, which is another recommendation of the Pearson Report?

The Prime Minister: What the right hon. Gentleman wants me to say I have said three times this afternoon. My right hon. Friend said it yesterday and the Government said it in a statement from Downing Street last Thursday. That is our position and I make it quite plain. Of course, it is a fact that the extent to which it can be accommodated without being inflationary depends on the implementation of the overtime recommendations of the Pearson Inquiry.

N.A.T.O. (MINISTERIAL MEETING)

The following Question stood upon the Order Paper:

Mr. HEFFER:: 55. Mr. HEFFER: To ask the Secretary of State for Foreign Affairs what proposals the Government have concerning the future of the North Atlantic Treaty Organisation.

The Secretary of State for Foreign Affairs (Mr. Michael Stewart): With your permission, Mr. Speaker, and that of the House, I will now answer Question No. 55.
At the North Atlantic Treaty Organisation Ministerial meeting which I attended in Brussels on 7th and 8th of June, agreement was reached on the essential changes in the military organisation of N.A.T.O. to meet the recent French actions. These are set out in the communiqué. The future of the Council will be discussed at a special meeting of the 14 Foreign Ministers in October. Meanwhile, possible new sites for it will be examined.
Other consequences of the French moves will now be studied by the Permanent Council in Paris. Its discussions will include consideration of the military missions and task of French forces in Germany and the French contribution to infrastructure and the North Atlantic Treaty Organisation Air Defence Ground Environment.
The Permanent Council will also study all possible ways of improving East-West relations, including questions of European security and German reunification, and will report to Ministers.
N.A.T.O., with its integrated defence system, is still essential. At the Brussels meeting action has been initiated to make it as efficient and economical as possible in terms of present requirements. It remains to be seen how the French announced intention to remain in the alliance can be expressed as an effective contribution to the common defence.
We shall certainly do all that we can to ensure this, but the 14 Governments are united in their determination that the alliance shall continue to be an effective and credible military organisation.
Copies of the communiqué have been placed in the Library of the House.

Mr. Heifer: Is my right hon. Friend aware that part of his Answer will undoubtedly please myself and my hon. Friends, but that another part of it is most unsatisfactory? As there is now a fluidity in Europe, can he give us an assurance that before a situation of rigidity is reached in N.A.T.O. he will take into consideration the views of the Rumanian Government and the Poles, that there should be moves towards the ending of both the Warsaw and N.A.T.O. Pacts?

Mr. Stewart: The reason why my hon. Friend, and I think probably everyone, finds part of my statement satisfactory and part of it unsatisfactory is that part of the whole foreign situation is promising and part of it is still very difficult. This is the fact of the situation.
I shall study the Rumanian and Polish proposals, and I shall have the opportunity, when I visit Rumania later this year, to carry that examination further. I ought to say that I would not accept the Rumanian statement that N.A.T.O. is an aggressive bloc.
On the question of the disappearance of N.A.T.O. and the Warsaw Pact, I do not think that the disappearance of these two alliances is a means whereby European security can be promoted. It is a result that can flow from the better establishment of European security. That is the significance of that part of the communiqué which deals with the importance of East-West relations. It comes to this—if, for the two alliances we now have in Europe, one were to substitute a Europe containing a score or more of countries, each deciding to make its own new arrangements about defence, I do not believe that it would be a safer Europe or a safer world than we have now. The problem is to see that our alliance holds firmly together, but at the same time, to seek better understanding between East and West. We are engaged in both of those tasks.

Mr. Sandys: Does the Foreign Secretary recognise the great urgency of making two decisions on two questions, namely, the question of, as I believe it, the necessity for the removal of the Council from Paris so that it can join its military wings, and the question of the French forces in Germany? Does he also realise that there is a great danger that N.A.T.O. will lose the political initiative, and that it is immensely important that N.A.T.O. should place a great deal more emphasis upon its political role and should take an active part in trying to improve East-West relations and not leave it all to General de Gaulle and the Soviet Union?

Mr. Stewart: I fully accept the importance of the two question to which the right hon. Gentleman referred. As I said in my Answer, they are being dealt with. The importance of the N.A.T.O. Powers taking a leading part in promoting better relations between East and West is fully understood and I laid emphasis upon this in what I said at Brussels. It is the view of the N.A.T.O. Powers.

Mr. Mendelson: With reference to my right hon. Friend's statement about improving relations between Western and Eastern countries, has he seen the concrete proposal discussed between Mr. Rapacki and the Swedish Foreign Minister during his recent visit to Stockholm, calling for a European security conference with the participation of the Soviet

Union and the United States of America? Would he not encourage the holding of such a conference in the near future?

Mr. Stewart: I should like to see a conference of that kind get going, but one wants to be sure that sufficient preparation is done in advance, so that it does not merely arouse hopes which lead nowhere. Clearly, this is the direction in which we want to go.

Mr. Heath: Would the right hon. Gentleman say what view he put forward at N.A.T.O. about the location of the Council? Has he abandoned the idea of it coming to London so that it can be near the military forces if moved? Secondly, is it not desirable that the problem of the French forces in Germany should be settled with the minimum friction? Should not it, therefore, be worked out first at military level before coming before Ministers? Thirdly, was there any discussion, official or unofficial, about foreign exchange costs and the suggestion of a pool? Would the right hon. Gentleman help the House by publishing the figures of foreign exchange costs of each N.A.T.O. country, together with any offset payments obtained by the stationing of other N.A.T.O. forces in their own countries?

Mr. Stewart: I should like to consider that last request. This matter was not discussed to any extent at Brussels.
On the first point, the view which I put forward, and which I still hold, is that the Council could not operate efficiently divorced from any of its military accompaniments and that the decision about where the Council goes must take that fact into account. But when choosing a site we must put the efficient working of the alliance first rather than preferences which any of us may have for a particular site. As I have said, the study of alternative sites has already begun.
I do not think that the question of French forces in Germany is a matter which can be settled by military people until certain political questions are quite clear—that is to say, what are the tasks and missions of these forces and what actions would they be expected to take in certain contingencies? Those are matters which must be discussed at political level.

Mr. Ronald Bell: Would the right hon. Gentleman say what is the N.A.T.O. Ministerial Council to which he referred? Is it something different from the North Atlantic Council? Is it not important to keep clearly in mind the distinction between the North Atlantic Treaty and military arrangements under one of its clauses so that one does not find oneself, for example, talking about the political functions of N.A.T.O.?

Mr. Stewart: Strictly speaking, the Organisation is something which flows from the Treaty, and one can think of them separately. But if we try to think of the Treaty without the Organisation, I think that we should be thinking about a very unreal abstraction.

Sir Alec Douglas-Home: I think that most people would agree that there is no case at present for ending the N.A.T.O. and Warsaw Pacts, but would the right hon. Gentleman give rather more attention than he has done up to now to the various plans for the thinning out of forces, both conventional and nuclear, on the West German frontier? These held promise, and it might be that the Russians would now be more sympathetic than they have been.

Mr. Stewart: I think that that may be so. I assure the right hon. Gentleman that I have given a great deal of attention to this matter, but he will realise that results in this field depend on the action of many Governments besides our own in both alliances. It is no good trying to talk in advance of what can be achieved.

Mr. Rankin: Will my right hon. Friend keep to the view which I understood him to express, that there is a first-class case for seeking to end pacts, because pacts register divisions, and divisions in Europe or anywhere else are a potential cause of war?

Mr. Stewart: We must get this the right way round. My hon. Friend says that pacts register divisions. It is, therefore, the division which one has to try to end. As I said, I do not believe that dissolving the pacts is by itself the road to agreement. It could well be the result of achieving agreement.

£ STERLING (SUPPORT ARRANGEMENTS)

Mr. Emrys Hughes: Mr. Emrys Hughes (by Private Notice) asked the Chancellor of the Exchequer whether he will make a statement on the measures taken yesterday by the Bank for International Settlements to support the £ sterling.

The Chancellor of the Exchequer (Mr. James Callaghan): Yes, Sir. Some months ago I authorised the Bank of England to join in discussions with other central banks to see if new arrangements could be made that would offset the difficulties to which sterling is subjected from time to time as a reserve currency. These new arrangements have now been concluded and were announced yesterday. I am circulating the text of the announcement in the OFFICIAL REPORT.
They supersede the arrangements of September, 1965. Their purpose is not to finance the United Kingdom balance of payments deficit. I would not have welcomed such an arrangement, for this is a task we must achieve ourselves. The new arrangement is important because it signals a recognition by other central banks that pressure on sterling may arise because of its position as a world trading and reserve currency and because of fluctuations in the sterling balances held by overseas countries.
The new facilities will offset the effect of such fluctuations and I welcome them as a practical step forward in the efforts to achieve greater co-operation in world monetary stability.
I should like to acknowledge the part played by all countries that have joined in these new arrangements, and particularly by the United States authorities, whose part in this new form of central bank co-operation is in addition to the standing bilateral swap facility for 750 million dollars.

Mr. Hughes: In addition to giving thanks to the United States, is it not timely that my right hon. Friend should say a few words of thanks to our old friends the French, who have come along with a very welcome gesture when we are very hard up? Is my right hon. Friend aware that the French have been able to do this because they are in a sound


economic position since they have abandoned their costly overseas commitments in North Africa and South-Eastern Asia?

Mr. Callaghan: The fact that the French have joined in these arrangements is, I think, welcome to all those who value monetary stability throughout the world as being a necessary lubricant to world trade. Therefore, I am very glad indeed that they have joined in.
As for a comparison of domestic policies, I would point out to my hon. Friend that the French have had great success in regulating increases in wages and other money incomes in accordance with production in recent years, and that, also, is an essential element in our policy.

Mr. Grimond: I welcome the agreement, but does not the Chancellor agree that the seriousness of the economic situation is not reflected in the attitude of the country nearly severely enough? Would not he also agree that, while we have so far bought time, we have unfortunately not been able to use it to the full? Does he think that for the leadership of the country to put on at this moment a deliberate display of luxury and idleness at Ascot will encourage people to exercise wage restraint and to work harder?

Mr. Callaghan: I find this question of morality or moralising very difficult indeed. I am bound to say that there are times when I feel that, although the Government and other responsible leaders throughout the country are pointing out to people in every walk of life the consequences of wages and other incomes increasing faster than production, it seems that we are talking to those who are deaf. In the end, the Government cannot achieve success; only the country can do it. At the moment, we have a lower sustained level of unemployment than we have ever had in this country in my lifetime. We have a greater number of people at work. In those circumstances, it is doubly important that people should regulate increases in incomes by reference to increases in productivity.

Mr. Bellenger: May I ask my right hon. Friend whether the terms given to Britain yesterday by the international organisation are on a three-monthly basis—that is to say, to run for a definite period, but can be given every three

months? If so, what is the meaning of the rider made about heavy Government expenditure and the high cost of wage increases? Does he think that that is a warning that at the end of three months there may not be a repetition of the support?

Mr Callaghan: My right hon. Friend is confusing two things. There was first the Bank for International Settlements' annual report, which is produced every June. It was produced this June in accordance with the normal practice under which strictures are passed on practically every country for the conduct of its economic policy. Like a great many other countries, our country did not escape. The arrangements concluded yesterday have nothing to do with the annual report made by the staff of the Bank for International Settlements.
There has been some confusion about the three-month facilities. Drawings on swaps in international banking circles are always concluded for 90 days. Therefore, drawings on the swaps come to an end and have to be renewed every 90 days. But the arrangement, as an arrangement, is a continuing arrangement. That is the essential protection.

Mr. Tapsell: May we hope that the Chancellor of the Exchequer will take a little more seriously than his last replies seemed to indicate the very serious criticisms of Government policy contained in the annual report of the Bank for International Settlements? Will he take steps to meet those criticisms, in particular the pressure on resources and the great degree to which prices are outstripping increase in production, which, the report says, lies at the root of our national problems?

Mr. Callaghan: I do not think that the hon. Gentleman can have been following Government policy. [Laughter.] In that case, I will enumerate the criticisms and the position. The first criticism was of the public sector being financed too much by monetary means. The hon. Gentleman seems to have overlooked that this year, because of the small size of the overall deficit, I hope to finance it entirely from National Savings, which are doing extremely well.
Secondly, there was the need for a reduction in wage increases. This is but echoing the sentiments which I and many of my colleagues have expressed on many


occasions. Thirdly, the report sympathises with our effort to break away from stop-go, which is what we are trying to do. Fourthly, it states that action is needed to increase the rate of saving: this we have taken. Finally, the Bank found the Budget to be broadly consistent with these requirements.

Mr. Cant: Do these arrangements represent a step towards the funding of sterling balances? Does the Chancellor believe that this country can support a situation in which sterling is a world reserve currency?

Mr. Callaghan: I think that this is going rather wider than I want to go this afternoon, except that I think that the creation of any additional international monetary facilities to stand alongside gold, the dollar and the £ are by their very creation bound to lessen the weight that falls on the reserve currencies. Therefore, it has been and remains the policy of the Government to encourage the creation of additional facilities. I should not want to go as far as my hon. Friend has asked me to go this afternoon.

Mr. Heath: Is the Chancellor not being unduly complacent in trying to distinguish between the problems of running a reserve currency and the balance of payments? Is it not true that when the balance of payments is healthy then the problems of a reserve currency do not arise, and, should they arise in some temporary form, can easily be dealt with? Is not the real fact that what the Chancellor has now accepted as an institutionalised form of support is really to that extent a mark of the Government's failure to handle the inflationary situation in the country?

Mr. Callaghan: I thought that the right hon. Gentleman would try to get his party point in somewhere, but I do not think that his analysis is altogether sound or fair. The basic difficulty of this country is that we have short-term debts of a very substantial character, because of the sterling balances, without sufficient short-term credits to enable us to discharge them when someone wishes to withdraw them. If we were more liquid, there would not be the same need for these facilities as, for example, in the case of the United States of America.
Of course it is true—and I do not think that anybody can accuse me of complacency about this—that the health of our economy is reflected in the nature and the flow of short-term money to and from it. But it does this country no service—here I am not complaining about the right hon. Gentleman—to assume that when there is a run on sterling this is necessarily the result of something that is ill or wrong with the British economy. I could refer the right hon. Gentleman to occasions where the two things have not gone together.
It is important that the world and the country should understand this difference, for otherwise we might theoretically be driven into deflationary courses that have no reference, or little reference, to our own internal needs, but have great reference to what is going on in the rest of the world.

Mr. Stratton Mills: What estimate was given by Her Majesty's Government in the Basle negotiations as to when our balance of payments is likely to move out of deficit? Could the right hon. Gentleman say whether any undertaking was given by the Government for internal measures, either directly or implicitly?

Mr. Callaghan: None was asked for, and, therefore, none was given. There were no requirements by the Basle central bankers in this connection. They were dealing with a different problem. I hope that I have made this sufficiently clear.

Mr. Dickens: Will the Chancellor remind our friends the foreign bankers that the conduct of economic policy in democracies is a matter for Parliaments, and especially for this House, and not for them?

Mr. Callaghan: I should have thought that everything that I said this afternoon was making that distinction quite clear. I do not understand what my hon. Friend is getting at. Of course, the conduct of economic affairs in this country is our responsibility and it is for us to take these decisions. On the other hand, no one can ignore the fact that other countries choose to hold a large part of their reserves in sterling and that, therefore, we have a responsibility to them also.
As I said at the weekend, frequently what other people are saying about sterling is just as important to its health as


the very truth of the matter. This is a conclusion from which no one can escape.

Sir A. V. Harvey: Is the Chancellor aware that the country is today expecting a positive lead from the Government? They are fearful that every few weeks measures will be brought before the House to deal with the situation. Why does he not follow the example set by some of the larger industries which are making themselves more efficient and start by reducing the number of civil servants and thus bringing about definite 'Government economies?

Mr. Callaghan: If that is the extent of the lead which is standing between success and failure, then I should say that it is a rather over-simplified analysis of the situation. We have to pay due regard to these considerations, but I assure the hon. Gentleman that there is much more than that at stake and that much more than that has to be put right.

Mr. Heath: Will the Chancellor face up to the fact that it is not enough to travel the country, however well-intentioned his speeches may be, displaying the sentiments which he has expressed this afternoon and hoping that all will be well, when every signal, especially those today, with the trade returns and the fact that the adverse trade balance for this year is now running at exactly the same rate as last year, points in the opposite direction? The only way to deal with the situation will be Government policies to remove the inflationary pressure. Until the Chancellor and his colleagues face this realistically, our difficulties will remain.

Mr. Callaghan: I have no doubt that we shall be debating this matter, but I have not noticed much sign of support, except by cheering, from hon. Members opposite, whose only contribution to the Budget was to recommend me to spend a lot more money on Government-financed projects—[An HON. MEMBER: "No."] The hon. Gentleman is not sitting on the Front Bench yet—and not only in the Budget but also during the course of the last General Election campaign, as I am sure the right

hon. Gentleman will remember. If it is said that more deflationary action is needed, the right hon. Gentleman should spell it out a little more clearly. Is he saying that I should now deliberately create a measure of unemployment?

Sir G. Nabarro: Reduce over-full employment.
Following is the text of the announcement:
The arrangements entered into last September with the central banks of Austria, Belgium, Canada, Germany, Holland, Italy, Japan, Sweden and Switzerland and with the Bank for International Settlements, will shortly expire. The Bank of England announce that new arrangements have now been made with this group.
During the last nine months exchanges of views have taken place at the Bank for International Settlements. As a result, new swap facilities, renewable every three months by mutual agreement, have been arranged, in which all the banks mentioned above are participating.
The object of these facilities is to relieve pressure on the official reserves of the United Kingdom that may arise from fluctuations in the sterling balances of overseas countries, whether held by monetary authorities or privately, and thus to give added strength to the sterling system. All these central bank facilities will be channelled through the Bank for International Settlements, which is also participating in its own right. The Federal Reserve System of the U.S.A. and the Bank of France also participated in the discussions.
The facilities arranged in September last with the U.S. authorities (which are additional to the standing reciprocal swap facility with the Federal Reserve System for 750 million dollars) have not expired and therefore continue alongside the new arrangements.
The Bank also announce that the Bank of France has concluded a three months' credit facility with the Bank of England, renewable by mutual consent.

SCOTTISH ESTIMATES

Committee of Supply discharged from considering the Estimates set out hereunder, and the said Estimates referred to the Scottish Grand Committee:—

Class IV, Vote 14, Roads, &c., Scotland,

Class VI, Vote 2, Scottish Development Department.—[Mr. Bowden.]

Orders of the Day — LOCAL GOVERNMENT BILL

Order for Second Reading made.

4.9 p.m.

The Minister of Housing and Local Government (Mr. Richard Crossman): I beg to move, That the Bill be now read a Second time.
When I introduced the Rating Act, in the last Parliament, I described it as the first jab of a two-pronged attack on the inequalities of the rating system. This Local Government Bill is the second jab. When we pass it through the House, as I hope that we shall before the Summer Recess, we in the Commons will have completed our share in the interim reform of local taxation to which the Government are pledged. Rate rebates, which were the main innovation of the First Act—the Rating Act—will soon be helping more than one million of the hardest pressed ratepayers.
Now, in this new Measure, we shall fulfil the second part of our election pledge by the creation of a double mechanism designed, first, to achieve a small but steady annual shift from rates to taxes; and, secondly, to use this shift in order to help the domestic ratepayer. Although the improvements we shall make by this two-pronged attack will involve the biggest reform of rating that has taken place for at least 100 years, I do not want to pretend for a moment that by this means we shall have achieved a viable system of local taxation. That will take time. What we are concerned with this afternoon is the second half of an interim rescue operation and I am more than ever convinced that the job of really radical reform must be undertaken as soon as possible.
When a few months ago I became Minister and made my first criticism of the rating system I was condemned as irresponsible by the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), who was then my shadow opponent. He told me that since rates are irreplaceable a responsible Minister should never attack them. During the last 12 months, however, the movement for the radical reform of rating has grown apace and more and more people have begun to realise that our whole system

of local democracy is now being rapidly undermined by the inherent weaknesses of rating as we know it.
Since the Prime Minister announced the terms of reference and the membership of the Royal Commission on Local Government, I have been delighted to observe, for example, that almost the only criticism which his statement invoked was a complaint by one or two newspapers that the Royal Commission had not specifically been enjoined by its terms of reference to work out a reform of local finance.

Dame Irene Ward: That was not my complaint. I made one.

Mr. Crossman: That was not the only complaint. I left the hon. Lady out. I have no doubt that the hon. Lady will make her complaint later.
Apart from her complaint, I welcome the spirit which motivates the critics who complain that we do not compel the Commission to consider the reform of local finance. The critics are right to recognise that for local democracy to flourish it must be based on a viable system of local taxation, but I should have thought that it was now clear that the reform of local finance must follow, not precede, the reform of local government. As long as we have in England alone about 1,200 units of local government, each with the right to raise its own taxes, it will be impossible to get rid of the rates or, indeed, to improve them very much more than we are doing in these two Measures.
In fact, it is the present structure of local government, with its inherent conflict between town and country and with its multiplicity of petty units, which is the root cause of the trouble today. Only when local government has been reconstructed on a larger scale and on modern lines will it be possible to answer the question whether rating should be abolished altogether and replaced, or whether it should be kept and strengthened by other taxes which do nor share its three inherent defects—regressiveness, lack of buoyancy, and sheer unintelligibility.

Sir David Renton: Sheer what?

Mr. Crossman: Unintelligibility.
I have been delighted at the speed with which the Royal Commission has settled


down to its job and I have every hope that before the winter of 1968 is over we shall have received its report and have been able to prepare our legislation. Nevertheless, since the reform of local government finance must follow the reform of local government, I cannot see how it can be undertaken in the lifetime of this Parliament. So there is every likelihood that for five or six years we hall have to be content with rates patched up as best we can. That is why we rushed the Rating Bill through during the short life of the last Parliament and why we have given the Local Government Bill, the second half of our rescue operation, such a high priority in this Parliament.
Before describing the main proposals of this new Measure, I want to try to outline what it is we have been trying to achieve in this two-pronged reform. I have just complained of three things which are wrong with rating as we inherited it: first, that it was socially unjust; secondly, that it was unintelligible thirdly, that it was unbuoyant. I think that these defects are inherent and cannot be removed without destroying rating, but they can be softened and blunted; and that is what We are trying to do.
In the Rating Bill we dealt with the injustice of rates as between ratepayers. Following the recommendations of the Mien Committee we created an instrument capable, if fully used, of reducing the burden on 2 million of the poorest, hardest-hit ratepayers. Despite the gloomy prognostications of one Sunday newspaper, two Opposition spokesmen and a handful of treasurers, the Act—hough I warned the House that it is a rough and ready instrument—is proving perfectly workable.
Indeed, I should like to pay tribute here and now to the energy, common sense and humanity with which it is being administered, not only by the vast majority of treasurers but, just as important, by a whole host of local National Assistance Board officials whose co-operation is essential to its safe working. It is their understanding and collaboration which are making rate rebates work. Indeed, the only defect so far manifested has been the slowness of the public to understand what is being offered.
The Act came into force at the beginning of April, and it was unfortunate that, for obvious political reasons, none of the propaganda which we had planned for publicising rate rebates could be launched during the key month of March. This may account for the comparatively small number of ratepayers who have so far made application and perhaps also for the fact that virtually no tenants have recognised that the tenant equally has a share with the landlord or the owner-occupier.
I have not got full details, but I think I had better tell the House what our rough calculations are. We reckon that so far in the first rebate period only about 1 million applications have actually been received. If our estimates are right, this is a little over half of those who are eligible. Even more puzzling is the marked variation between town and town and region and region. Here are a few examples which I thought might interest the House. Incidentally, the figures are up to mid-May.
I will take two successful areas first. In Liverpool, 27,000 applications have been received, representing 13·3 per cent. of domestic hereditaments. In Bourne-mouth, 5,348 applications have been received, representing 11 per cent. of domestic ratepayers. At the other end of the scale, in Barnsley, 915 applications have been received representing 3–8 per cent. of domestic ratepayers. In the London Borough of Lewisham, 4,250 applications have been received, representing 5 per cent. of domestic ratepayers.
Taking a case in the middle of the scale, in Whiston rural district in Lancashire 1,500 applications have been received, representing 8·4 per cent. of domestic hereditaments. There is thus this enormous variation between 13 per cent. and 4 per cent. for the numbers applying in different parts of the country.
These figures show that we have a long way to go before every ratepayer entitled to the rate rebate is drawing it. Nevertheless, applications last month were still coming in at the rate of 100,000 a week and I am sure that in the second six-months period which begins next November they will be substantially increased.

Mr. Julian Ridsdale: How much of the burden will go on to the other ratepayers, because in my division it represents an increase on the rates of 3d.

Mr. Crossman: As the hon. Gentleman knows very well, 25 per cent. is carried by the other ratepayers. I can assure those hon. Members of the Opposition who helped us to smooth out some of the wrinkles in the Rating Bill that this reform has already removed from the rating system its most glaring social injustice.
I turn now to the other two main defects. I want, first, to consider—this will interest the right hon. and learned Member for Huntingdonshire (Sir D. Renton)—unintelligibility. I will illustrate this by the fact—the right hon. and learned Gentleman will not deny that it is a fact—that there are those in the House this afternoon who cannot explain exactly how gross value differs from net annual value or why the amount they pay for their own dwellings differs from the amount paid by their neighbour for what is apparently an identical dwelling.
Moreover, the difficulties in the way of explaining the working of the rating system as it applies to dwelling are as nothing compared with those which face us when we start looking at the rating of a nationalised industry. One of the constant and largely justifiable complaints of local authorities is that there is no rational way of reconciling the growth of a great State monopoly in any particular area with the amount that it pays in rates. There is, indeed, an insoluble difficulty in applying a local tax based on rental value to a gas works, an electricity works, a railway yard or a water- works which, in any normal sense of the word, has no rental value as such.
Local authorities can make what seem to them to be a convincing case for a new reassessment of a nationalised industry or a water board in their area, but the nationalised industry can make an equally convincing case against any particular formula that a council or the Minister puts forward.
I must admit that, after vainly trying to find a principle on which rating for these public services could be based, I have almost been driven to the conclusion that it is really a question of thinking

of a number and seeing whether one can get away with it. Let me add rapidly that this is only a passing feeling and not a settled conviction. But I must admit to the House that despite all the efforts, despite much prodding from the local authorities and much hard work by my Department, we have not yet worked out a satisfactory new formula. It is a gap in the Bill which I hope can be filled before the Committee stage is over.
Would it be possible to make rates more intelligible and more defensible by breaking away from rental value—an aspect which is getting rarer every day as owner-occupier and the council landlord take over from the private landlord? Would it be possible, in fact, to substitute capital value for rental value? At first sight, that is tempting, until we realise that the simple idea of basing rates on capital value in the sense of what the property is actually worth is quite impracticable.
Moreover, to switch to capital values would cause a greater upheaval than that which follows a normal revaluation, and it might well produce scores of social anomalies that no one could defend, so that the simple, intelligible capital values that one hoped to achieve would soon be distorted by concessions to particular interests and so become as hoary and mythological as rental values are today.
It would be absurd to say that capital values are not worth looking at. Some research upon them is contemplated by my Department. But we are not prepared to invest a large amount of skilled manpower in chasing what will probably prove to be another will o' the wisp. If rates are to be retained, it will probably be impossible to dissociate them from a rental value, with all its mythological disadvantages.
I now turn to the third inherent defect of rating as a system of local finance; its lack of bouyancy. As a local tax, rates have the great advantage that they are locally based. Unlike human beings, who live in one place and work in another, houses stay put; they are fixed assets, and rates which are based on house property are genuinely local and easy to collect. But they have the defect of their own virtues. Because they are a tax on a fixed asset valued on a certain date at a certain sum, they are not a


levy like Tobacco Duty or Income Tax, which expands automatically within an expanding economy. The trouble about rateable value, from the treasurer's point of view, is that it takes no account of growth and change. A rateable value does not change naturally, even with the increased convenience one obtains by building on a new bathroom.
It is not buoyant in that sense of the word. On the contrary, it remains at a fixed sum until a valuer comes along and reassesses one's property. If the quinquennial revaluation does not take place, then what justice there ever was between ratepayer and ratepayer will become progressively distorted as one property increases in value but pays no extra rates and another decreases in value but gets no automatic remission.
Even if the valuation were always fair and intelligible, which it very often is not, rates are a tax which starts getting out of date the very moment the valuation is over. No wonder local authority treasurers rely on the quinquennial revaluation, and no wonder they were upset when I announced that the revaluation due next year would not take place. The reason for the postponement is the shortage of valuers which has been intensified by other commitments, such as tae establishment of the Land Commission.
In the absence of the 1968 revaluation, is has become essential to introduce what was a desirable and a long overdue change Ea the law. Most of the properties in the current valuation lists were assessed by reference to the level of rents prevailing in 1962. As the law stands, a new property which has to be assessed now, four years later, ought strictly to be valued by reference to the levels of rents now current. But, in times of changing prices, that might create unfairness and result in identical adjoining properties having different values. It has been the practice, since valuation officers took over the job 16 years ago, to value new property in what is called the "tone of the list". The Bill provides an overdue statutory basis for this fair and sensible practice of valuers.
It lays down that the value must be fixed as though the valuation were being made at the time when the list was being prepared; that is, in 1962. The property and the locality are, however, to be

assumed to have existed at that time in their present state. Anyone who tells me that a fair rent is difficult to understand will appreciate that a "toned" list is equally difficult.
It means. for example, that if a shopping centre has become more prosperous because of some change in local circumstances such as a new car park, the replacement of small premises by large stores or the building of a housing estate nearby, the valuation would be on the basis of the rents that would have prevailed had those changes already taken place when the list was being prepared in 1962. The same applies, naturally, to the property itself. If it has been altered, valuation will take account of its current state. I hope that it is clear that by doing this we shall make sure that, as houses are assessed, the assessment will not value them too high.
Apart from the change to the statutory justification of the tone of the list, the only really important change in rating which we have introduced is the rating of empty property. Hitherto, in England and Wales, except for the City of London, no rates have been collected on empty property. Rates are a personal tax chargeable on the beneficial occupier. Where there is no occupier, no one has been rated. That means that owners have been able to leave buildings empty for long periods without making any contribution to local revenues. One of the things which people most widely recognise as a social anomaly is the failure to rate empty property in order to prevent people keeping it empty for long periods.
I do not regard the rating of empty property as a revenue raiser, and I have not made it mandatory on every authority. Its main purpose is to discourage owners from keeping their property vacant and thus to reduce the waste of accommodation. It is an affront that houses or flats should be left empty in areas where housing lists are long and the pressure on accommodation severe.
At the same time, I am prepared to accept the view of some of the local authority representatives with whom there have been consultations that in many areas there is little, if any, anti-social withholding of property from occupation and that in those areas the operation of the provisions for the rating of empty


property would cost more and require more staff than the results could conceivably warrant. It is for that reason that the Bill lays down that the provisions shall not be mandatory. They apply only if adopted by any particular rating authority. The pressure has come mostly, I may say, from the Greater London area, for obvious reasons.
Where the provisions are adopted, there will be no liability until a property has been unoccupied for three months. After that, the owner will have to pay half the rates that would have been payable if it were occupied. So as not to discourage house building for private ownership, the free period for newly erected dwellings is to be six months. Certain classes of buildings are to be exempted entirely. Those include properties which it would be unlawful to occupy on account of a clearance order, those under threat of compulsory purchase, and historic buildings which are often very difficult to let. The Bill gives me power to add to the exemptions, and, during the Committee stage, I shall listen carefully to what is said about proposals for increasing the list of exempted buildings.
Before turning to grants, which is the other main subject, I want to touch on Clauses 29 and 30 and Schedule 3, which deal with licences and registrations, subjects with which I was not very familiar before I became a Minister.
I am astonished to find the number of licences which exist and which local authorities are entitled to raise. When I started, I hoped to abolish the lot, if I could, but some are in local Acts which I cannot change and some are in general legislation and very much mixed up.
The Bill deals with only the 33 licences listed in Schedule 3. Those in Part II of the Schedule have their charges or maximum charges unalterably fixed by Statute. The earliest of them were fixed over 100 years ago. The most productive, the dog licence, was fixed at its present 7s. 6d. 88 years ago. If I read the papers aright, there are those outside who believe that it should be increased, not because of the increased value of dogs, but to improve the status of the dog.
What the Bill does is to enable the appropriate Minister—in that case the

Minister of Agriculture—to alter the fee by Order if he feels so fit. It is a continuing power, so that it will be practicable to review the charges from time to time and alter them as seems appropriate. I hope that the House will agree that this is a reasonable and long overdue change. We had hoped that it might have been possible to dispense with a substantial number of local licences and registrations. Someone got in before us to get rid of armorial bearings, manservants and the like. But I found, for example, that county councils are still required by the Agricultural Gangs Act, 1867, to issue licences to persons of good character fit to be entrusted with the duties of gang-master. Those duties still include preventing females from being in the same gang as males, or from being under the control of a male gangmaster. Since the fee is only 1s. for six months, I felt it was hardly worth keeping, and we have therefore decided to repeal the licensing requirement.
We have also decided that it is possible to abolish the gun licence. As there is justifiable public anxiety about the use of firearms, I should remind the House that a gun licence is obtainable on demand from the Post Office. There is no question of the suitability of the applicant. The licence serves no control function and, as it does not raise very much revenue, I thought that it might as well disappear.
So much for licences. I now turn to grants, which is the most difficult part of the Bill.

Sir Spencer Summers: Before the right hon. Gentleman leaves that point, can he say what will be the effect of it on game licences?

Mr. Crossman: None at all. I have not changed game licences.
Our concern is with the rapid growth in rates, and our aim is to establish a principle by which a fair balance can be struck between the burden to be carried by the ratepayer and the burden to be borne in the form of grants by the taxpayer. We have introduced a new concept in the relationship between the Exchequer and local government. Hitherto, the total Exchequer aid has been no more than the sum of the individual grants, and changes in the proportion between grants and rates have been


the casual result of changes in the pattern of local authority expenditure.
By the Bill, I hope to finish with that disconnected, almost random, approach. Under the new scheme, we shall first, in consultation with local government, build up an estimate of the total local authority expenditure on revenue account for each of the next two years. The total grant, excluding housing subsidies and capital grants, will then be determined as a proportion of that expenditure. In other words, one first of all assesses the total expenditure and then fixes the grant as a percentage of that expenditure.
Once the total is established, all else becomes a question of distribution between local authorities. The creation or abilition of a specific grant will not affect the total grant. That is not to say that the cost of new and developing services will fall entirely on the rates. Services of all kinds will be taken into account in building up estimates of total expenditure and will influence the total amount of the Exchequer aid for the year. When it comes to deciding whether there should be aid for a particular service related directly to the expenditure of the individual authority, both Government and the local authority associations will be able to address themselves to the merits of the case, knowing that their conclusion will make no difference to the total amount of Exchequer aid to local government, but only to the way in which it is divided between the local authorities.
The next stage is to estimate the part of the aggregate Exchequer aid which will be required to pay specific grants. Under the Bill, we have introduced four new specific grants. The first is for expenditure on comprehensive redevelopment. The second is for land for public open space. The third is for the reclamation of derelict land, 50 per cent. of which goes outside our development areas. The fourth is in respect of certain expenditure due to large numbers of Commonwealth immigrants in any area. In national terms, these four new specific grants are relatively small, but they can be of critical importance to a small number of local authorities which are concerned with urban redevelopment or which have great immigrant problems.
I am determined to keep the number of specific grants to the minimum. One of

the results will be to knock out two important specific grants. One relates to lower category highways, which I shall discuss later. The other relates to school milk and meals. Neither of them satisfies the test which I have laid down, which is that there should be special need to control the service centrally or that the expenditure is unevenly distributed. We have decided that a specific grant can be justified only on two grounds: that it is required because the service concerned requires unusually close control from Whitehall—for example, the police force—or, alternatively, that the service is so unevenly spread that it would be unjust to leave the few authorities concerned to bear the total cost of this quite unusual expense.
Those are the two conditions which I have laid down for specific grants.

Mr. John M. Temple: The right hon. Gentleman has mentioned four specific grants.

Mr. Crossman: Four new ones.

Mr. Temple: There appear to be five—Clauses 7 to 11, inclusive.

Mr. Crossman: The fifth—I think that it is the fourth one—is merely a reaffirmation of existing grants in a different form.
Coast protection is an obvious example of the second type of specific grant. Not every area has coastal problems. If those areas which have them were left to deal with them alone, they would be overwhelmed by the problem. School meals do not meet the requirement because every authority provides school meals; they are firmly established in every local authority and are now accepted as an integral part of the education service.
I repeat that the amount of the total aid paid out in specific grants will be even smaller than before. Even with the four new specific grants, when one reckons in the police grant and the grant for principal roads, only about 15 per cent. of the total will be distributed in specific grants and 85 per cent. through our new rate support grants.
I now turn to the rate support grant, which is a single grant but is divided in the Bill into three separate elements. One


of these I have called the needs element, corresponding to the old general grant; the second is the resources element, corresponding to the former rate deficiency grant; and the third, a new one, is the domestic element.
The needs element, which is a new version of the old general grant, will, like the general grant, be distributed among major authorities according to a very complicated weighting formula. In the Bill, the formula differs from that of the general grant in several important particulars. For example, the weighting must now incorporate both a new highways factor and a new factor for school meals, which have ceased to be specific grants.
Looking at the Schedule, however, it will be found that there is no mention of school meals. That is because it contains only a reference to education units—a horrible phrase which I must explain, because the education units are a genuine refinement of the weighting formula in the old general grant system.
At present, under the old general grant system, the supplementary education grant is based on the numbers of primary and secondary school pupils on the school register. Thus a primary school child carries the same weight for grant purposes as a secondary school child aged 16, although a place for the latter costs the local education authority an average of three and a half times the cost of a place for the former. Students who are being educated at the expense of the local authority and in other institutions of further education were not counted at all in the old distribution formula.
The use of the education unit will largely overcome both those defects. I am still discussing the precise details with the local authority associations. Broadly, however, our intention is that a pupil or student at a particular level of education should count as a number of education units in proportion to the national average annual cost of education at that level. That is to say, if an authority has more children of secondary age or more in further education than of primary school age, it will get a bigger grant for that reason. For example, the primary school child will probably represent one unit and the over-16 secondary

child three and a half units. Incidentally, the take-up of school meals will be another item which earns education units.

Sir S. Summers: In comparing the two types of child and the basic cost, does that mean that it can vary from year to year?

Mr. Crossman: It will vary each time the grant is re-estimated in the two-year period. There is no difference here from the present system; one estimates the number of children. Of course, it varies in each biennial period.
I turn now to the resources element.

Mr. James Allason: Before the Minister leaves the question of the supplementary grant, can he confirm that he is thinking in terms roughly of one-third of the education grant being in the supplementary grant and two-thirds in the basic element?

Mr. Crossman: No; there are not two elements. The education grant will be in the needs element, all of it in one element.

Mr. Allason: Surely, in view of the factor of the number of the population under the age of 15, it will be the basic element. This is an important point to local authorities, because there is such a wide variation in education costs between different authorities.

Mr. Crossman: I repeat that we have been slightly more novel than the hon. Member thinks. I have defined the needs element in a grant which has three elements: needs, resources and domestic elements. The education grant will come in the needs element.
I will try now to explain the resources element, which is simply the old rate deficiency grant in a somewhat new guise with the main difference that the total amount of the resources element will now be fixed in advance. This is done to meet the criticism made by the Public Accounts Committee of the openendedness of the rate deficiency grant in its Fourth Report in the Session 1963–64. The total amount of this rate resources element will, if we get our calculations right, bear the same proportion of estimated expenditure which rate


deficiency grant has borne since the 1963 valuation.
The House may express surprise that a Labour Minister, in view of the strong opposition of the Labour Party to general grant while we were in opposition, should produce only minor modifications in the general grant.

Mr. Geoffrey Rippon: We express pleasure.

Mr. Crossman: I hope that I may combine a little pleasure and surprise, too. I have been surprised and impressed by the affection which so many treasurers show for the two old grants, the general grant and the rate deficiency grant. Since we are preparing only a holding operation before the big radical reform of local finance, I have accepted the consensus of the treasurers and I have tried to improve and rationalise the existing system to make it as palatable as possible in the intervening period.
As the treasurers made only too clear to me, it would be somewhat unreasonable to impose two upheavals of grants upon the local authorities, particularly when we are asking them to administer a whole lot of other improvements in rating, rate rebates, rate instalments and, as I shall show presently, domestic re-rating. Local authorities are being asked to do more changing during these two years than they have had in the whole period since the war. They have been bitterly complaining about these changes, z nd I did not want to add any gratuitous changes. I must admit, however, that I can see much more to commend itself in general grant at this time than I estimated when I was in opposition.
I therefore come to the third element in the new rate support grant, which I call the domestic element. This is completely novel and it is designed simply and solely to help the domestic ratepayer who feels himself overwhelmed by the size of the annual increase in his rate demand which, unless we cut back the social services, has become almost inevitable.
When I introduced rent rebates, I was well aware that although I was helping the hardest-pressed ratepayer, I was doing so at the cost of imposing a further burden upon the rest of the ratepayers, who are bearing 25 per cent. of the cost.

In all justice, I found it essential to find a special way of helping them, and the way I have chosen can best be described as domestic derating.
I propose to pay out a special grant each year designed to lower the domestic ratepayer's poundage as compared with that of the industrial and commercial ratepayer. That seems to me to be common justice, because the domestic ratepayer is the only ratepayer who pays the full rate. Agricultural land and buildings are still entirely exempted from rates. We have made no proposition in the Bill to alter this. Charities get 50 per cent. relief as of right, and in the Bill we have made sure that this discrimination is maintained in the case of empty properties.
Commerce and industry are no longer derated, but they are permitted to treat their rebates as deductible expenses in computing profits for tax purposes. On average, therefore, commerce and industry get 40 per cent. or more of their rates back from the Exchequer. Only the poor old householder has to pay. If only he were allowed to charge his rates as a legitimate living expense, he would be on a level with the shop and the factory, although not with the farm.
Domestic derating will work as follows. In fixing our total of grants, we have decided not to keep the present balance but to shift the balance from rates to taxes by 1 per cent. a year: £30 million in the first year, £60 million in the second year, £90 million in the third year, and so on. We shall devote almost the whole sum to the domestic ratepayer by means of this special domestic element in the rate support grant. The rate support grant order to be made under Clause 2 will, therefore, specify not only the amount of the domestic element, but its equivalent in pence in the £ of a rate reduction for householders.
Rating authorities will then be required by Clause 6 to reduce the rate levied on dwellinghouses by that number of pence in the £ and will, in turn, get a share of the domestic element proportionate to the amount of relief which that reduction affords to their ratepayers. This reduction to householders will not result in an increase to commerce and industry, since it will be made good as near as may


be by the extra grant made by the Government through taxation. Furthermore, the domestic element will not use up the whole of the extra grant and all ratepayers, including householders, will get some benefit from the balance. The poundage reductions for domestic ratepayers will be 5d. next year, 10d. the year after, and so on.
Finally, I turn to highways, Part III of the Bill. We intend to bring about a drastic simplification——

Sir S. Summers: When the right hon. Gentleman says "and so on", does that mean that the poundage reductions for domestic ratepayers will be 5d. next year, 10d. the year after, and so on, proportionately indefinitely until the rates are wiped out in favour of taxation?

Mr. Crossman: Oh, no. I have indicated that this is a short-term interim measure before the drastic reform. However, it means that each year 1 per cent. of the total will be transferred from rates to taxation. This is a shift of burden from rates to taxes. One per cent. is to be given to the domestic ratepayer, equalling roughly 5d. in the first year, 10d. in the second year, 1 s. 8d. in the third year, and so on. Clearly, this could not go on for ever. It can be done only for a period.

Mr. Rippon: I am sure that the Minister does not want to mislead the House. Will he not agree that all that is happening under the Bill is to give to the ratepayer some relief from the increase in his rating bill? The bill will go up year after year in spite of this.

Mr. Crossman: Of course. I am saying that, roughly speaking, half the increase falling on the domestic ratepayer will be covered by this special grant. If I had divided it up, less than one-quarter would have gone to the domestic ratepayer, but by giving not a sou to the commercial or industrial ratepayer and putting it all to the domestic ratepayer, I can just get it up to 5d. out of an average of 10d. in each year.

Sir D. Renton: Would the Minister agree that if the new rate support grant replacing the general grant produces less money for a county council than the general grant now produces, there is a serious risk that the 5d. extra due to the domestic element could be wiped out?

Mr. Crossman: Yes, there might be a possibility. We are negotiating with the county councils on this point to ensure that it does not happen. The right hon. and learned Gentleman will see the position more clearly when he has heard what I have to say about highways, which is the disputatious element, and about how this affects the counties and the county boroughs.
I want to simplify the question of central Government grants for roads, which at present are classified in Classes I, II and III. In England and Wales there are about 15,000 miles of Class I roads, 13,000 miles of Class II and 42,000 miles of Class III. The Minister of Transport pays specific grant for major improvements and for maintenance and minor improvement at rates of 75 per cent., 60 per cent. and 50 per cent., respectively, to each of these classes of road.
The payment of specific grants inevitably means a degree of detailed control by the central Government which may have been acceptable when the classified road programme was relatively small, but the great expansion of the road programme in recent years has brought us to see the need for drastic rethinking.
Under the new arrangements, all local authority expenditure on highways, with the one exception, will receive its grant by way of the rate support grant. It is part of the general grant, like education The exception is the improvement of the so-called principal roads. I have made the exception because it bears so unevenly between one local authority and another that they would be unfairly burdened if they had to sustain it. For these so-called principal roads, 15,000 miles of them, there will be a specific grant of 75 per cent. for those who have to pay for them.
In addition, the Bill provides that highway maintenance in county boroughs and in inner London will become eligible for Exchequer assistance for the first time since 1929. Part of the extra £30 million which the Government are to make available next year is intended to give assistance in this respect without drawing upon the money already available to other authorities. There is an argument here as to whether this is sufficient to compensate the counties for what they fear might be a loss as a result of this transaction, and we are still discussing the matter with them.
I think that all this will amount to a great simplification of the highway grants system. By limiting specific grants to the improvement of those roads which make an important contribution to the national highway system, we are, I think, striking a better balance between the respective responsibilities of central and heal government in carrying out the road programme, and giving local government a greater degree of independent decision. All those concerned—engineers, lawyers, and administrators—will be able to concentrate their efforts on bringing about road improvements where they are most needed.

Mr. Ronald Bell: Can the right hon. Gentleman give a rough estimate of the proportion of present Class I roads which he envisages as being principal roads?

Mr. Crossman: I have roughly indicated them, because I said that there were about 15,000 miles of Class I roads, and we would have about 15,000 miles of principal roads. This is roughly the same as the figure for Class I roads. The figure for principal roads is roughly the same, but not precisely so.
I come now to street lighting, where, again, we have an important improvement in Clauses 23 to 27, because our present organisation of street lighting, like that of local government, dates from, and is rooted in, the nineteenth century, when the main purpose of lighting was "watch and ward" and preventing robbery. With the growth of motor traffic, however, another function has emerged, the prevention of traffic accidents which are the main source of danger. Lighting and road safety are now so closely connected that highway authorities must, we believe, be the lighting authorities. Good lighting in appropriate places has been shown to reduce the number of accidents after dark by at least 30 per cent. It follows that our organisation of lighting must be geared to this primary purpose of road safety.
At present, the size and resources of lighting authorities vary. Local authorities range from parishes to county boroughs. Many are not the highway authority for the roads they light, and, even when they are, their highway powers and their lighting powers are separate, and lighting is not legally eligible for

grant as a highway improvement. The result is that road lighting is often patchy and uneven as the road passes from the area of one authority to another. Some of the smaller authorities simply do not have the resources of manpower or money to provide an adequate standard of lighting.
In principle, I am convinced that the highway authority for a road should be the lighting authority. It is wrong that there should be a division of responsibility between lighting and other forms of highway improvement. The design of a highway, including its lighting, must be done comprehensively. The decision whether road lighting is needed depends on such factors as traffic flow, the lay-out of the road, and the accident record. In many cases there is a choice between the installation of lighting and some other form of improvement.
What we are determined to ensure is that the authority responsible for lighting is the one which is in the best position to take such decisions, and which has the resources to carry them out. By "resources" I mean not only financial, but manpower resources. Good road lighting calls for engineering techniques and experience, which are not available to the vast majority of small local authorities today, and are best developed in greater concentrations of work.
Thus, we have drawn this distinction in the Bill between road lighting, which is provided mainly for the benefit of traffic, and footway lighting, which is provided mainly for the benefit of pedestrians. The effect of the Bill is to leave the responsibility for footway lighting with the existing lighting authorities, while transferring the responsibility for road lighting to the highway authorities.
We have, however, made provision for highway authorities to delegate the carrying out of their new lighting responsibilities to existing lighting authorities if they think fit, and this provision enables the existing organisation and experience of lighting authorities to continue to be used when it seems appropriate. I hope that this will go some way to meet the objections which have been raised to this part of our proposals by some of the local authorities affected.

Mr. A. P. Costain: The Minister referred to the Public Accounts Committee, where there


was some reference to the authority of his accounting officer for roads. Is this affected in any way by the Bill? It was felt by the Public Accounts Committee that it was wrong that the Minister's accounting officer should have responsibility for expenditure on behalf of the Ministry of Transport.

Mr. Crossman: The hon. Gentleman has floored me with that question. He had better wait for my hon. Friend the Joint Parliamentary Secretary to reply at half past nine, because that is a detail which I cannot answer this afternoon.
I do not want to go on for too long. I think that I have covered the main provisions of the Bill. It is not an easy Bill to understand. Indeed, I found it almost as difficult to read as the Rent Act, and that is saying a good deal. But I am sure that in winding up the debate my hon. Friend the Joint Parliamentary Secretary will, with his usual perspicacity, elucidate all the points which I have left obscure and unintelligible.
When we look at them together, what can we fairly claim for these two Bills, the Rating Bill and the Local Government Bill? I think that there are six things. First, they soften the regressive character of the rates. Secondly, we have introduced two long overdue reforms of rating, the mandatory right to pay in instalments, and the rating of empty property. Thirdly, we have provided a solution to a major technical problem, the fair assessment of properties between general revaluation. Fourthly, we have imposed for the first time a principle on which grant aid can be determined totally, rather than as a series of disconnected items.
Fifthly, by the use of these mechanisms we have provided a method of slowly, continuously, and steadily shifting part of the increasing burden from rates to taxes. Sixthly, and lastly, we have made sure that the continuous reduction in the proportion of the rate burden as compared with the tax burden is not distributed over the whole field of ratepayers, but is concentrated exclusively on the hardest hit, the domestic ratepayer.
As interim Measures pending a radical review when the work of the Royal Commission has been concluded, I commend these reforms to the House, with the added observation that although the help they

provide is modest, it is a great deal more than anything attempted by our predecessors.

4.57 p.m.

Mr. Geoffrey Rippon: We have heard the Minister open this debate by referring back to the discussions on the Second Reading of the Rating Bill last December and describing this as the second jab of a two-pronged attack on some of the inequalities and iniquities of the rating system. This is not a jab. It can hardly be described as a pinprick. It certainly would not be right to describe the Bill as a major reform, or the most important reform for the last 100 years.
As the Minister said, it is not an easy Bill. I would say that it is not even the most intelligible Bill that we have had even in one year. Of course, we are grateful to the Minister for the explanation that he has given in his characteristic fashion of the provisions of this Measure, but I think that he has been guilty of a great deal of over-valuation of the Bill. Indeed, it ought to be said at the outset that because of the way in which the Minister has presented the Bill there is a real danger that the public will be seriously misled by what he has said.
I have two preliminary observations to make. First, it is clear that the Bill cannot be described in any way as a fulfilment of the Government's pledge to give early relief to ratepayers. Indeed, and this was brought out in the short exchange that we had during the Minister's speech—the average ratepayer, including the domestic ratepayer, will receive next year a larger bill than ever before. The year after that it will be larger, the year after that it will be larger still, and this will go on, as the Minister said, throughout the life of this Parliament.
Secondly, the Bill is certainly not the major reform which the Minister has talked about so frequently, and indeed after listening to him this afternoon it is fair to say so recklessly, since he took office. All the brave words have ended up with a Measure which is to some extent a technical reorganisation of the grant system on principles long established and of which we approve, and the debate has boiled down from that to a discussion on dog licences, street lighting and the rating of empty property, which,


whatever may justify it, cannot be regarded as any sort of contribution to the finances of local government or to the relief of the general body of ratepayers.
What the House must understand is that ratepayers are in for a very bad time in the next few years under the Government's policies and administration. In 1965–66, it was estimated that the percentage increase in rates in England and Wales was 13·9 per cent. The latest provisional figure for 1966–67 is 11·8 per cent., making a total over the two years of 25·7 per cent. Nothing in the Bill will relieve the ratepayer, domestic as well as commercial, from carrying an increasingly heavy burden in the years ahead.
There are, of course, perfectly acceptable arguments for saying that ratepayers, in any event from most authorities, get good value for their money. But what the Government must stand condemned for is the way in which they have consistently promised action which has never materialised and solutions which either did not exist or which they have now cynically abandoned. It is right that the House and the country should recall some of the quite unequivocal declarations of intent which the Minister has made in the last year or so from that Dispatch Box.
On 5th May last year, the Minister told the House:
… what we face now is a situation in respect of rates which is so serious that we must introduce reform and a radical change in the shortest possible time.
He continued:
No one can afford to tolerate rates going up at a compound interest of 8 per cent.… The system must be changed. … We shall reform the rates.
For good measure, he added:
We shall have to have a special grant for education and once more take education out of the general grant."—[OFFICIAL. REPORT, 5th May, 1965; Vol. 711, c. 1492, 1493, 1495.]
That was hardly more than a year ago. He then went on not merely to give a pledge to shift the whole of teachers' salaries from the rates to the Exchequer, but also to declare that he did not think that that was enough and that a much bigger operation was required.
By the time of the Second Reading debate on the Rating Bill on 6th December last year, the Minister was in full spate against the inequities of rating,

which he described as "aggressive and vicious". He went on to describe the Rating Bill as
… a short-term relief from this unpleasant tax while we make our plans to abolish it. That is the central point. Without a radical reform of local taxation, including the abolition of rates, I see no future for local democracy …"—[OFFICIAL REPORT, 6th December, 1965; Vol. 722, c. 43.]
What the right hon. Gentleman has told us this afternoon is that local democracy will have to go on surviving for many years without the Minister's proposed radical reforms and in spite of all his Delphic warnings.
Now, "the oracles are dumb". If I may adapt the Delphic oracle's message to the Emperor Julian, we must tell the ratepayers:
… the bright citadel has fallen to the ground; Appollo hath no longer any shelter or oracular laurel tree or speaking function.
However, having heard the Minister this afternoon it would probably be premature to put in the final part of the message and add that
… even the vocal stream has ceased to flow.
While we may give a measure of welcome to any Bill which ensures the necessary continuation of existing contributions to local government expenditure, we cannot be asked to greet this particular Measure with any great display of enthusiasm. As it stands, the Bill is, in our view, totally inadequate in relation both to the Government's promises and to the needs of the times. It is certainly very far from being the "very big reform" which the Minister promised last November.
We are now told that the reform of the rating system must come after the reform of local government. The Minister says that this will not, of course, be within the lifetime of this Parliament, but that it will be five or six years before we can hope to do anything about the local government financial system.
It is against that background that we must try to decide something far less exciting—whether Part I of the Bill, which distributes the Exchequer grants, provides within the present structure of local government areas and finance an equitable distribution of the burden, first, between the local authorities and the Exchequer.


second, between one class of ratepayer and another and, third, between one local authority area and another.
On the first point, the distribution of the burden between the local authorities and the Exchequer, the Bill must be regarded by everyone as inadequate—not because of the machinery which it suggests, which, in spite of what the Minister said about it, is not very revolutionary, but because of the way in which the Government have so far indicated that they propose to use it.
I think that the local authority associations have been unanimous in expressing their disappointment to the Minister at the total amount of grant proposed. There are no figures in the Bill. All we know is that, according to the Explanatory and Financial Memorandum, it is the intention to provide additional Exchequer assistance of about £30 million in 1967–68. £60 million in 1968–69 and £90 million in 1969–70, and so on. But what the amount of grant will be in future, expressed as a percentage of local government expenditure, we do not know——

Mr. Crossman: One per cent.

Mr. Rippon: That is what the Minister says. It is not in the Bill. Perhaps he should write it into the Bill and, if so, perhaps make it 2 per cent.
The Bill says simply that, for the purpose of fixing the aggregate amount of rate support grant for any year, the Minister "shall determine" the aggregate amount which is to be available and distribute it in such amounts "as may be prescribed". Nothing could be vaguer than those words in the Bill. There is no indication in the Bill of any intention to make available any prescribed fraction of local government estimated expenditure.

Mr. Crossman: I think that it is fair to make a comparison. When the right hon. Gentleman's own party introduced the general grant—I have been looking back—it seemed to me as though the Bill in which they introduced it was in much the same form as our Bill for introducing the rate support grant. Perhaps the right hon. Gentleman would tell us what figure his party put into that Bill.

Mr. Rippon: I am grateful for what the Minister says: that is what I have been saying. This Bill is not a major

reform. It is in much the same form in which the Conservatives put forward their general grant proposals——

Mr. Crossman: They introduced a mechanism without writing in a figure. We have introduced a greatly improved mechanism, but have written in no figure, just as the party opposite did.

Mr. Rippon: But we gave more information as we went along than the Government have done. Nor did we make the sort of statement which the right hon. Gentleman made of the intention to do something in a definite way and then not write it into the Bill. If the Government say, "It is our firm intention that the increase should be 1 per cent. per annum", they should put that into the Bill.
As it stands, the Bill refers not to the amount which local authorities need, but only to the amount which is available. From the point of view of the local authorities and their ratepayers, it would seem important that the Bill, if possible, and certainly the Minister, should give a much clearer indication of the basis of all these grants for the future.
At the moment, our discussion of the Bill is effectively limited merely to the general structure or, as Mr. Aneurin Bevan used to say, to the size of the spoon, and does not relate to the amount of jam which will be put in it. The White Paper issued last February said in paragraph 15:
The aim will be to keep the average increase in rate poundages more nearly in line with the growth of the economy as measured by the gross domestic product.
That does not appear in the Bill, or even as a declaration of intent in the Explanatory and Financial Memorandum.
Indeed, even this afternoon there have been expressed the fears of the County Councils Association in relation to one authority and another. They have also made representations to the Minister that the amount of the additional grant in total proposed for 1967–68 and subsequent years will be insufficient to achieve that aim. It may be that the omission from the Bill or memorandum of the intention which was expressed in the White Paper is deliberate.

Mr. Eric Lubbock: Does the right hon. and learned Gentleman have any figures showing the increased


total amount in recent years which would enable us to make a comparison with the £30 million, £60 million and £90 million mentioned in the memorandum?

Mr. Rippon: I will be coming later to the question of how this matter should be dealt with and what previous Governments did to assist.
As far as we can judge, the greater part of the additional grant envisaged will be used simply to keep down the growth of the rate poundage for householders and, of course, even an Irishman's decrease of this kind is entitled to some welcome. However, by 1969–70 the amount of relief under the Bill will, I judge, be well below the amount of relief which would be brought about if the Government accepted the proposals we have made.
Our proposals would involve the transfer from the rates to the Exchequer of the cost of a number of services, like Class I and Class II roads, teacher training and student grants. That would reduce the rates by about £100 million in 1967–68. And to the extent that the cost of many of these services is rising, such a transfer would, by 1967–68, be worth more than £100 million of relief.
Or the Government could have acted on the suggestion made by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) on 5th May and simply, as an interim measure, have given £100 million across the board through the general grant. Yet even under the Government's present intentions, by 1969–70 the amount of relief will be only £90 million. There is clearly a limit to the process by which one can transfer local government expenditure to the Exchequer if one is to have sufficient responsibility entrusted to local government and have local government in a real sense. We accept that, but what is being proposed now is very much less than the party opposite promised the country it would do.
While it may be counted to the credit of right hon. and hon. Gentlemen opposite that they have abandoned their repeated pledge to abolish the general grant and to restore the percentage grant for education, it is a betrayal of ratepayers' expectations for hon. Gentlemen opposite to rat on their firm undertaking to

… transfer the larger part of the cost of teachers' salaries from rates to the Exchequer
When the Minister spoke last May he said that there was a pledge to transfer the whole amount, but the right hon. Gentleman is notoriously careless, which is the Parliamentary way of putting it, about a number of matters, such as housing statistics and similar pronouncements to the House. Since the cost of teachers' salaries is already well over £550 million—and the rates meet 40 per cent. of that—this Measure cannot be described, by the wildest flight of Wykehamist imagination, as carrying out that specific and definite commitment.
The fact is that the £30 million in 196768 will barely, if at all, make good the increase in costs which are taking place not as a result of improved social services but as a direct result of the Government's policy of high interest rates, mounting taxation, increased postal charges and the rest. According to the Financial Secretary to the Treasury, speaking in the House last month, local authorities will need to raise £1,700 million by borrowing in the year 1966–67. It is very necessary, therefore, to take account of the effect of high loan charges on the rates, bearing in mind that in 1965 loan charges amounted to £457 million or something like one-sixth of the current total expenditure of local authorities.
We are now to have the Selective Employment Tax, under which local authorities will, presumably, have to pay the tax in the first instance whatever their prospects may be of ultimate reimbursement. That, in effect, means that local authorities will have to make an interest-free loan to the Government. The Greater London Council, I understand, has estimated that the cost of that to the Council will be £4·5 million in a full year. This is a factor which must be reflected in the rates, at any rate to some extent.
All the information we have about the S.E.T. is that it is to be dealt with separately and that local authority returns in respect of grants under the Bill are not to include the S.E.T. as expenditure. Perhaps the Parliamentary Secretary will tell us more about this later.
It must also be borne in mind that this £30 million increase for 1967–68 must


immediately be offset to the extent of about £10 million because the Minister explained that he has had regard to the £7 million extra burden on the rest of the ratepayers as a result of the Rating Act, 1966, plus the £2 million cost of administration. There is also any amount which the Government may allocate for the new specific grants under the Bill of which, so far as I understand it, only about £1 million has been spoken of in current discussions. All in all, there will be only about £20 million of relief, largely for domestic ratepayers, in 1967–68.
While the principle of the new specific grants—covering matters which vary from one local authority to another—is to be welcomed, it is the adequacy of the financial provisions about which we will need to know a lot more. Moreover, as these are to be a first charge on the aggregate grants, they may be made in future at the expense of the general relief to be given to other local authorities.
That brings me to the second question, whether there is an equitable distribution as between one class of ratepayer and another. Some useful action has been taken, which we welcome, to provide a measure of relief for the poorest ratepayers as a result of the action recommended by the Allen Committee, which we set up. I welcome what the right hon. Gentleman said about the action he is going to take to ensure that this is properly administered and as reasonably as possible. The right hon. Gentleman gave me some assurances the other day at Question Time that there would be a generous attitude taken to an extension of time if people did not make their applications on time.
But as my hon. Friend the Member for Harwich (Mr. Ridsdale) pointed out, this action puts up the rates for the great majority of ratepayers, although it can be said that the domestic ratepayer will have some relief in the sense that some of the increase in the rate demand will be removed. However, there is nothing in the Bill for small shopkeepers who are having to face increasing costs, remembering that they are not necessarily easily able to bear them.
But even the assistance being given to the domestic ratepayer is meagre compared with the relief which was given

during the period of Conservative Administration. I recall having long arguments with the present Foreign Secretary about whether, under the General Grant Order with which I was concerned in 1961, the percentage was 55·5 or 55·3. Some of those percentages gave rise to certain difficulties, but I suggest that under Conservative rule and under the grants which Conservative Governments made, more than 50 per cent. was given; in other words, more than 50 per cent. of the increase in the burden at that time was met.
We must remember that we gave very much more relief than that. Far more important a reform than this Measure was the comprehensive rerating of industry which we carried out. In 1955–56, the domestic ratepayer paid 59·8 per cent. of the total rate bill. That was when industry was derated 75 per cent. In 1963, we fully rerated industry so that, in 1965–66, the domestic ratepayer paid only 47 per cent. of the total rate bill. If we had not carried out that measure of reform, last year the domestic ratepayers would still have been paying 59·8 per cent. of the bill; in other words, they would have had to have found £140 million more.
We carried out a major revaluation, and that helped the domestic ratepayers in many areas. We brought in the Rating (Interim Relief) Act, 1964, under which grants of about £6 million a year are being paid now—and we shall want the Minister to tell us what is to happen to these grants, because we know that they will be diminished and then abolished. We hope that in the new grants regard will be paid to the eventual loss to the local authorities of this £6 million a year.

Mr. J. T. Price: The right hon. and learned Member refers to the action taken by the previous Administration in the revaluation of household property. I was a member of the Standing Committee on the 1959 Act, and we told the Minister in charge of the Bill that it would result possibly in an increase in valuation of up to 300 per cent. He said that this was nonsense and a gross exaggeration, but a Clause was built into the Act to give special relief if our forecast proved to be correct. I challenge the right hon. and learned Member to deny the statement made by the Minister that, in fact, the revaluation


brought no benefit to ratepayers and that its general effect was to increase rates. The rate poundage did not fall as much as the valuation rose.

Mr. Rippon: It varied from area to area. In a great many areas the domestic ratepayer paid a smaller proportion of the total burden; although the valuation of his property may have risen, the valuation of other properties, including industrial and commercial properties, went up, too, and therefore their share of the burden was increased.

Mr. Price: Not at that time.

Mr. Rippon: Over the years the average increase in the rate poundage has been very considerable, as the Minister said. Nobody denies that. But the Allen Committee showed that the most serious aspect of the position was only just about to arise. As reported in paragraph 54, it said:
Our evidence suggested that some householders are as much concerned with the impact of rates in the future as in the present. They may be able to cope with their existing rate demands and just get by, but they are afraid that if rates continue to rise in the future as they have done in the past, they will no longer be able to make ends meet".
This fear can be readily understood when it is realised that this year there was an average increase of no less than ls. in the rate poundage, about the same as in the previous year. The average householder will be paying this year almost £40 compared with £18 13s. ten years ago. It is against the background of that situation that the total provision envisaged by the Government at the moment, even for the domestic ratepayer, is in our view pitifully small and inadequate, and we have said specifically what we should have done and what we still urge the Government to do to increase it.
What may be of even more concern—my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) referred to it—is the distribution of the various Exchequer grants as between one local authority and another, because if this is not done on a fair and equitable basis, some authorities will be penalised instead of being helped.
Although the Bill proposes a reoganisation of the grants, it does not contemplate any fundamental change in their nature.

Indeed, the basic principle of the general grant, so long condemned by right hon. and hon. Gentlemen opposite, has been preserved and even extended under the Bill. Eighty per cent. or more of the Exchequer assistance, including the support for education, we are told will be distributed through the new rate support grants. I understand from the Minister that there are three elements. The first is the needs element, which corresponds to the general grant and which will be distributed on a formula basis. The second is the resources element, which is the present rate deficiency grant, but—and this may be significant later—distributed within a fixed total. It is only the third element, the domestic element, which is in any sense new.
But how far such changes as these will be beneficial will depend on factors and information about which the Government need to tell us a great deal more. This is, in effect, only an enabling Bill, in that the aggregate amount of the Exchequer grants will be dependent on Government decisions and their distribution on detailed formulae to be agreed under the various headings set out in the first Schedule.
Can the Parliamentary Secretary say, in his winding-up speech, how far the discussions with local authority associations have gone? As virtually all the financial provisions will be contained in the rate support grant order, will he tell us when he expects that to be published or when we shall be given some information about what will be in it? Above all, will the Minister, before Committee stage, publish a Schedule giving a comparison between the existing position and that now envisaged, as it will affect individual local authorities? That was the demand which I remember the Opposition made when we introduced the Bill in 1958. It may be that it was in the Committee of which the hon. Member for Westhoughton (Mr. J. T. Price) was a member that they demanded, before they went ahead, a Schedule setting out how this would affect individual authorities. We conceded that demand, and no doubt the Minister will behave equally rightly.
It may well not be possible to show the effect of the changes in the grant system on every individual local authority. But we ought to have at least some sample figures, because it can be very misleading to talk about the total


increase in grant or the effect on the so-called average ratepayer when the situation can vary so much between one type of authority and another and when the formulae can throw up serious disparities. As the White Paper said:
Here, as in other fields, averages conceal more than they reveal.
Nobody—I am sure not the Minister—feels any sympathy for the statistician who drowned in a river of an average depth of two feet.
One of the most important proposals contained in the Bill concerns the new arrangements for education. As I understood the Minister's explanation, there are to be two main changes. First, instead of there being a grant based uniformly on the number of school children, under the Bill the grant will differ according to age, on the ground that it is more expensive to educate an older child. That seems sensible enough in principle.
We on this side of the House have never taken the view that provisions laid down in any particular order at any particular time in 1958 or at any other time—were sacrosanct. But we need to have much more information than we have at the moment about how this will work in practice, because the Bill is silent as to the variations to be made according to age between one education unit—I agree with the Minister that it is a horrible expression—and another.
The second change is the merging of the 100 per cent. specific school meals and milk grant within the rate support grant. Will the Minister give an assurance that no local education authority will lose financially as a result of this change? And since so much is to be left by the Bill to subsequent regulations, can the Minister assure us that there will be full consultation with local authority associations before he makes his regulations?
That is the most important part of of the Bill—that relating to the grants and and distribution of the grants. Part II contains very little in the way of reform of the rating system. The only proposal in the whole Measure which can remotely be regarded as a reform of the rating system is the provision for limited rating of unoccupied properties. The Minister

said that he does not put it forward as any financial contribution. There may be something to be said for it, particularly as it has been left to the discretion of individual local authorities as to whether they adopt it, but I think we shall find in Committee that there are serious difficulties of drafting and definition. As the Bill stands, so far from this provision being all that intelligible, it may be that most local authorities will come to the conclusion that it would be better to let it go than to go through all that trouble.
For the rest, we have a mass of minor amendments and some tentative steps in the direction of the consolidation of rating law. We are to have the repeal of the rateability of the "inhabitant parson-vicar", in what the Minister called a great rating reform. I am not sure why we should have this consolidation process at all if the Minister is to abolish the system at the earliest opportunity. He sneered at my right hon. Friend the Member for Kingston-upon-Thames for having said this to him, but he has a duty to make the rating system work as well as possible as long as it exists. This is what the Bill fails to do and what the Minister fails to do. It is particularly regrettable that he has abandoned the 1968 revalution simply by inserting "1973", and it is not good enough to say that there is a shortage of valuers because of the Land Commission. This ought to be the priority, not the Land Commission.
The Minister makes the point that rateable value does not grow on its own and that if revaluation does not take place, distortions increase year by year. This is the case for revaluation. Even if the 1963 lists could be regarded as perfect, it would be necessary for revaluation to take place at regular intervals, for there is bound to be a continuing, widening gap between the level of assessment and the true value with every year that passes. But we know that the 1963 revaluation was far from being perfect. Speaking on the Report stage of the Rent Bill on 30th June and referring, particularly, to London, the Minister said:
Unfortunately, under the new valuations … in some areas more than a quarter of the rateable values are unfair. "—[OFFICIAL REPORT, 30th June, 1965; Vol. 715, c. 705.]
As long as the rating system remains, it must be the first priority—and in some


areas the most urgent need—to have an equitable valuation list. It is no good raying that we shall have elaborate provisions for maintaining what is termed the tone of the list, provisions which may be intelligible to the Minister but are not ill that easy to understand, if errors existing are to be perpetuated under the Minister's policy and if existing anomalies are not to be corrected and wrong policies are not to be righted.
The Minister said that he would do something in Committee. I hope that he will do something about capital values. By all means let us consider capital value, although not necessarily as an immediate reform. Perhaps the right hon. Gentleman can do what the professional associations suggest, which is to have capital value considered by valuers and the Lands 'Tribunal as part of the evidence of the value of a property.
The Minister talks about how inequitable the arrangements are for the rationalised industries, but he is to do nothing about them for five or six years. If he chinks that they are all that un-intelligible and inequitable it is his duty to do something about them. All his diatribes against the rating system have done is to undermine morale and damage recruitment in the valuation service in which he himself admits there to be a shortage of skilled people.
All of us, Socialists, Conservatives and Liberals, are aware of the difficulties and weaknesses of the rating system. Rates have been the subject of alarm and despondency since time immemorial. When the Royal Commission on Poor Law reported in 1834, we were told that the whole nation looked on
in a kind of paralysis at the inordinate growth of moral abuses, of industrial disaster, of ruinous expenditure.
Since then we have had numerous Royal Commissions and working parties to try to find new sources of revenue and all the Prime Minister has been able to say and all in effect that the Minister now says is that they hope that someone will stumble on the secret one day. They do not think that it is very likely to be Ole Minister. He still goes around abusing the rates, with not the slightest idea in his mind of what to put in their place. Nor, let us face it, is the Royal Commission likely to be able to give him any help, because it is concerned only incidentally

with finance so far as it may affect the viability of any changes it suggests in relation to the structure and function of local government.
If the Minister says that the system is as bad as all that, something should be done now, in Committee or elsewhere, to consider the various suggestions which have been put forward. We know that they, too, have weaknesses, whether they are rating of site values, or a sales tax, or assigned revenues, or higher dog licences, but sooner or later we in the House of Commons will have to take the necessary decisions ourselves. We cannot just go on abusing the system, as the Minister does, and then doing absolutely nothing but make the situation a great deal more difficult. If we have to have the rating system, as the Minister says, for five or six years, it is no good his refusing, when he says that it is as bad as it is, to give any sort of worthwhile relief, or a fair and equitable administration under the present system.
We regard the Bill as being justified as a means of continuing Exchequer grants, and justified because it embodies the general principle of the general grant which we have supported. But we need much more information before the Committee stage about how the Bill is to work and we hope that it will then be very much improved. Unfortunately—and this is the final verdict on the Bill—it only tinkers with the real problems while serving the Minister as a means of wrapping up just another series of broken pledges and broken promises.

5.35 p.m.

Mr. James Wellbeloved: The Bill will receive a warm welcome on this side of the House and outside the House. As with all the Measures put forward by the present Government to redeem the disasters which they inherited, it will receive the same grudging support from hon. Members opposite which they have given on so many other occasions.
The right hon. and learned Member for Hexham (Mr. Rippon) was a little coy in his support for the new-found Conservative policy of £100 million off the ratepayers and on to the taxpayers. I can understand some of his coyness, having looked up what he said in a debate initiated by his hon. Friend the


Member for Harwich (Mr. Ridsdale) four years ago. The right hon. and learned Gentleman said:
…I think we are now striking about the right balance between the contributions from the national and local taxation."—[OFFICIAL REPORT, 2nd March, 1962; Vol. 654, c. 1777.]
Things can change and perhaps it is understandable that the right hon. and learned Gentleman is a little hesitant about so publicly showing his rapid transformation of opinion.

Mr. Rippon: It is a long time.

Mr. Wellbeloved: It is a long time. We shall be going into this conversion, this sudden concern which is bursting forth from hon. Members opposite for the ratepayers.
It is not true that rates have only just started increasing over the last 20 months. The average increase in rates over the last 10 years has been about 10 per cent. The right hon. and learned Gentleman's figure of 25 per cent. was a little stretch of the imagination, a rather unusual mathematical process. I was not aware that to add the average increase of two individual years gave the total increase, although I know that the total increase comes somewhere near it. The total increase in the last two years is only 20 per cent. I have the figures available, although they may be somewhat different from those dragged up and dreamed up by the Conservative Central Office.

Mr. Rippon: The hon. Gentleman will get the figures from the Rating and Valuation Association, whose figures I quoted.

Mr. Wellbeloved: I have those figures and I also have the figures which my right hon. Friend gave to the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter).
Talk of this figure of £100 million is a dramatic departure in opposition from the sort of policies which the Conservative Party put forward in power. What were the Conservatives then doing about the rate burden on the ordinary ratepayer? What were they doing about the demand of my hon. Friends to transfer some of the burden to the taxpayer? What were they doing about the suggestion to transfer whole services,

education, grants to students, further education, civil defence, registration of births, marriages and deaths, to the taxpayer, as was suggested by the hon. Lady the Member for Finchley (Mrs. Thatcher) at the Tory Party conference? What did hon. Gentlemen opposite suggest in their promises at the last election, and what did they do when they had the opportunity?
I can quote nothing better than their election campaign guide for 1964. It has a rather amusing title, which refers to it as a unique political reference book. Indeed it is, for it is a catalogue of excuses for not having done in those 13 years all those things which, in opposition, they now have the effrontery to press upon the Government. In that guide, on page 301, they said:
It is all too easy to talk airily … about transferring the cost of whole services … to the taxpayer … but are they prepared to face higher taxes in consequence?
That was what they were staying when they had the opportunity to transfer the services.
The change came when they went out of office and they have now come forward with this proposal. I do not know whether to call it a proposal, a policy, a promise, or a bribe. It can hardly be a policy and is certainly not a promise, because the promises of right hon. Gentlement opposite have little chance of being put into operation and some chance of being implemented must be inherent in a promise. We had better stick to calling it an electoral bribe, which seems to fit the bill.
How does this promise or bribe now of £100 million transferred from the rates to the taxpayer compare with what the Opposition actually did in their one Act which brought relief to ratepayers, the Rating (Interim Relief) Act, 1964? The sum total was £100,000.

Mr. Rippon: Mr. Rippon indicated dissent.

Mr. Wellbeloved: The right hon. and learned Gentleman shakes his head. I can only quote from his own party's political propaganda, from the Notes on Current Political Affairs, issued by the Conservative Political Centre. I take the figure from that. This was the sum total in relief to ratepayers. I know that there was £6 million, but under Section 2 of the Act only £100,000 was direct relief


to ratepayers. Yet right hon. and hon. Members opposite, after such dismal failure, talk now in terms of £100 million.
It is interesting to try to track down when this proposal for the transfer of £100 million first burst into the light. It seems that the hon. Lady the Member for Finchley brought it out at the Conservative Party conference. The right hon. Member for Bexley (Mr. Heath) immediately snapped it up. Anything which is new, bright or at all "gimmicky" has a fatal fascination for the right hon. Gentleman.

Mr. Lubbock: "Gritty" is the word.

Mr. Wellbeloved: "Gritty" is the right word. Perhaps "grotty" is the term we would use in London. I think that the right hon. Gentleman's flat must be packed with detergents, patent potato peelers and, perhaps, even some "smashing" new plastic aprons. New "gimmicky" things certainly have a great fascination for the right hon. Gentleman.
As I say, he seized this proposal from the hon. Lady the Member for Finchley and he launched it in his television broadcast on 15th December, 1965. He launched it as a brand new product, and he spoke easily and airily of moving whole services from local to national taxation. But it takes time even for a gimmick which has the blessing of the Leader of the Conservative Party to become official policy. I suppose that we ought to have some sympathy for hon. Members opposite because, even when it becomes official policy, they never know whether the right hon. Member for Wolverhampton, South-West (Mr. Powell) or the Monday Club will agree with it.
What happened next was the publication of the political notes by the Conservative Party on 20th December. But there was not a word about the £100 million there. It had not yet seeped through to official quarters. There was talk only of the Conservative Party having for a long time urged that the Government should deal with the hardship arising out of rates.
Of course, it might have seemed a long time to Conservatives, 13 months as it was then. I suppose that the difficulties

which they had been having with their leadership at about that time, a long and painful period in their history, must have made the time seem longer. Then, in February, 1966, the £100 million really burst on the nation in full trim. We had the next edition of the unique political reference book. This was a reversal of the previous unique political reference book, because it explained why all things had suddenly become possible though they were impossible before. In fact, it was the greatest unintended compliment to my right hon. Friends since they took office. The party opposite now recognises that it is possible to do many of the things which it found impossible during the 13 years of Conservative Government.
So we can go on. [Laughter.] I suggest that hon. Members opposite contain themselves with patience. In a moment or two, I shall deal with the London Government Act and the effect of their policy on London ratepayers. If they then find something to laugh about, they must be very peculiar people or live a long way from London. I think that they are, in fact, peculiar people.
In its propaganda, the party opposite has been talking about the long time during which Conservatives have urged the Government to undertake rating reform. They tell us that they have been consistently doing it, but, in fact, when they had the opportunity, they failed dismally to put any such thing into effect.
The Bill is the second step, as my right hon. Friend said, towards redeeming our pledge to bring early relief to ratepayers. The first step was the Rating Act which enabled a considerable number of people—I think that my right hon. Friend spoke of 1¼ million—to obtain relief. Again, what a contrast to the performance of hon. and right hon. Members opposite when they had their opportunity. It is all very well to laugh and jeer, but it is quite useless when in opposition to make suggestions for things this Government should do when they failed to do them themselves when they had a chance.
The right hon. Member for Leeds, North-East (Sir K. Joseph), when he was Minister of Housing and Local Government, said that he could not see how it was possible to give direct grant in


support of individual ratepayers. In December, 1963, he said:
Unfortunately, it is not possible for the Government to direct general grant to individuals who are in difficulty ".—[OFFICIAL REPORT, 18th December, 1963; Vol. 686, c. 1264.]
Yet what is not possible for the Conservatives is possible for my right hon. Friends. They have done it in the Rating Act.
The Bill fundamentally changes certain aspects of local government support. There is very little difference as regards needs and resources, and whether there will be any beneficial effect here on local government finances will depend entirely on the amount of the cake which the Minister makes available.
The provisions regarding the domestic element are very welcome. The effect will be for the first time to contain the annual increase in rates. As regards the specific grants for development, I hope that the regulations which the Minister publishes will be a little clearer than the present legislation. I understand that grants for development and reclamation can be obtained under the Town and Country Planning Act, but I am advised by my own local authority that this is a very difficult piece of legislation to interpret. I urge my right hon. Friend to make certain that his regulations under this provision are really clear.
We all welcome the provisions regarding the rating of unoccupied property. The Minister said that this would be particularly welcome in London. Indeed it will. In my borough, the London Borough of Bexley, it will represent something between ½d. and ¾d. off the rates. It will be a most welcome exercise.
I was rather amused when the Minister referred to the miscellaneous provisions and licences. My mind was brought back to the dog licence deduction. I see that, under the Bill, the Postmaster-General is to be able to deduct his costs of collection from the licence fees before they are transferred to the local authorities. But I notice that the Bill refers only to counties and county boroughs in this connection, and I assume, therefore, that the London boroughs are to be exempt and will still continue to receive the whole amount of the dog licence fee.

I do not imagine that this will be of great support in relief of the terrible burden laid upon London, but it will be something.
We in London are pleased also to see that the Government intend to continue the supplementary payment to local authorities in the Metropolitan area, that is, continuation of the present system under which the Metropolitan area receives a 5 per cent. increase of basic grant. Reading the debate when the Minister introduced the general grant in December, 1964, I noticed with some satisfaction that he expressed his sympathy with Londoners who are today suffering from steep and substantial increases in rates. He went on to say that he would ask the London boroughs and the Greater London Council to contain themselves in patience. London has contained itself in patience for two years; the ratepayers of London are reaching the point of exhaustion.
Urgent help for London is needed now. London has been recognised as a high-cost area for years, and it had 5 per cent. extra on the basic grant long before London government reorganisation. I recently reread the debates which took place in this House on London government reorganisation and it was with fresh astonishment that I read the final sentence in the speech by the right hon. Gentleman the Member for Wolverhampton, South-West in the Second Reading debate when he said:
I ask the House not to deny these benefits to the capital city of the empire."—[OFFICIAL REPORT, 11th December, 1962; Vol. 669, c. 338.]
Benefits! A strange term to describe the financial disaster that has befallen London ratepayers as a direct result of the London Government Act which was forced through by the hon. Gentlemen opposite. That comment was not out of keeping with the right hon. Gentleman who in the 1960s can still talk of Empire. London has been raped; it staggers, battered, bruised and bleeding from one rate demand to another. It has been ravished by the hon. Gentlemen opposite in their vain lust for power in London. [Laughter.] Hon. Gentlemen opposite laugh. They did not achieve power in London because of the courage and integrity of some Members like a former Member for a Croydon constituency, who opposed


his own Government's proposals. There were some hon. Gentlemen opposite, representing constituencies in Surrey, who opposed the entry of their areas into the London government organisation. This is how hon. Gentlemen opposite were frustrated, but London staggers, degraded and debased by the cynical, irresponsible folly of London government reorganisation.
Strong language, but what are the facts? Rates in England and Wales, since amalgamation, have gone up by approximately 20 per cent. London has suffered an average rate increase of 32 per cent. in the last two financial budgets. Even with the domestic element provided in this Bill, London boroughs will still be at a grave disadvantage. The time has come for them to be relieved of the financial burden thrust upon them by the Tory reorganisation. I would have expected hon. Members opposite to have expressed some sympathy for London ratepayers, because they are responsible for this effect. There is no difference between the London boroughs, irrespective of the political complexion of the parties in control. They have all suffered to an almost equal degree from the tremendous increases that have taken place.
I would like to give some examples of the terrible burden from which London is suffering. I have chosen the boroughs represented in this House by the hon. Gentlemen opposite. I do not see many of them here, they do not seem to be very interested. The ratepayers in the constituency of the hon. Gentleman the Member for Merton and Morden (Mr. Atkins) have suffered an increase of 38 per cent. against a national average of 20 per cent. Is he satisfied with this? Did he tell his electors at the last election, when he gained the maiority of 420, that they were paying 18 per cent. more than the rest of the country as a result of the activities of his party in reorganising London government? Of course he did not, or else he would not have got the 420 votes which gave him his majority.
Did the hon. Gentleman the Member for Carshalton (Captain W. Elliot), whose ratepayers have suffered an increase of 36 per cent.—with a Conservative-controlled council—tell his ratepayers the facts? What about the hon. Gentleman

the Member for Twickenham (Mr. Gresham Cooke)? In the Conservative-controlled London Borough of Richmondupon-Thames the ratepayers have faced, in two years, a rate increase of 51 per cent. Are hon. Gentlemen opposite still happy? Do they still find some joy and laughter in this, the results of their irresponsible folly in forcing London government reorganisation through without taking account of the financial effects?
I can remember my own local authority pleading with the then Minister of Housing and Local Government to postpone for another year the appointed day for reorganisation, so that London might consult to bring some realistic appraisal to salaries and staff. That was turned aside and the result has been a mad scramble, a mad market shambles to obtain officers. The results are here in these fantastic increases which have taken place. Let us take one of the London boroughs which was not altered in its boundaries. I refer to Harrow. This is an area which is precisely the same now as it was before reorganisation. What has happened there to rates? Under a Conservative-controlled council the ratepayers of Harrow, for the benefits conferred upon them by reorganisation, have had, in two years, to face an increased rate bill of 44 per cent.

Sir S. Summers: Will the hon. Gentleman explain, when he has finished with his list, what help such local authorities and ratepayers are to get from this Bill?

Mr. Wellbeloved: If I read the debate correctly the former Member for Brent-ford and Chiswick, Mr. Dudley Smith, very often criticised his own Ministers. I wish to make a proposal to my hon. Friends. I believe that my hon. Friends have spent 20 months struggling valiantly to reduce the effects of the disastrous policies of the party opposite, pursued for 13 years. They are doing it with great success, but in London there is another aspect to which they must turn their attention in redressing the disastrous effects of the policies of the party opposite.
I will not bore hon. Gentlemen with a detailed list—[Laughter.] Hon. Gentlemen may laugh, but I can assure them that the ratepayers of London are not laughing. They are crying, because they have been faced with this terrible financial burden, which was not of their own


choosing and which was forced upon them. If they can justify an increase of 44 per cent. in the rates of Harrow in two years, then perhaps I can satisfy my ratepayers. There is no answer to this. Even the fact that Harrow School is derated as a charity cannot account for the 44 per cent. My hon. Friend the Member for Harrow, East (Mr. Roebuck) assures me that this is so.
We in London are victims of the same disaster and I beg the Minister to embrace this battered body of London and to give it some relief. Great harm and injustice has been inflicted upon the people of London, which can be alleviated by a special supplementary grant. This is what I am asking the Minister to do—not just to continue the 5 per cent. on the basic grant, but to give to London a supplementary grant which will go a long way to alleviating the ravages cast upon it by hon. Members opposite. I ask the Minister in the name of the great City of London and the Greater London Council area, to reach out and grasp the bleeding hand of London.

6.0 p.m.

Sir David Renton: The hon. Member for Erith and Crayford (Mr. Wellbeloved) told us that after 20 months of Labour Government his constituents are exhausted and staggering but that the Bill redeems the pledge made before the 1964 General Election to give early relief to those and other ratepayers. I think that the hon. Gentleman's speech can be summarised by saying that the sour grapes are ripening at last, but that they will still be very small and the pips enormous. I hope that the hon. Gentleman will forgive me if I do not follow his apologia of his own party or his analysis of the Conservative Central Office's apparently accurate information which he used.
This is an abstruse and difficult problem which affects everyone. The burden of rates still falls most heavily on those who can least afford them. The Rating Act helped only 2 million ratepayers, but it did so at the expense of all other ratepayers, including millions with limited means. In spite of the promise to which the hon. Gentleman referred made before the 1964 election to give early relief to ratepayers, the Bill does nothing to

lighten the load already being borne which has been increased by 25–8 per cent. since the 1964 General Election. I think that that is the accurate figure, using the sources which the hon. Gentleman used. It will give relief only in respect of future increases, and only minor relief at that.
It should not be assumed that the Bill will give relief to all domestic ratepayers, because, as it stands, many ratepayers will receive no benefit at all for the reason which I put to the Minister in an intervention, namely, that the 5d. increase in the domestic element can easily be wiped out in the case of many counties by a much more serious factor, which is the extent to which the new rates support grant falls short of the general grant as it now is. It seems that domestic ratepayers in my constituency will be worse off as a result of the Bill.
To put it mildly, the Bill is a disappointment to all ratepayers. I should think that it must be a very great disappointment to the Minister, who was pretty candid about it. I rather admired his presentation of his subject this afternoon. He acknowledged that it is a very difficult and obscure subject. He acknowledged his own limitations, with which I sympathise. I have some limitations, too, in understanding parts of the law on this subject. But, with his strong personality, I wonder how he has been able to contain himself behind the scenes when the Bill has been discussed among his colleagues. This is not a new episode in the Minister's life arising only in this Parliament, because in February we had the White Paper on Local Government Finance in England and Wales, which was the Government's prospectus on which they went into the General Election on this issue which aroused so much concern.
Paragraph 5 on page 4 of the White Paper is relevant to the announcement recently made about the Royal Commission. That paragraph reads:
The Government have made a careful study of possible sources of local revenue with the object of substituting for rates as we know them a new and fairer system of local taxation. But they find themselves "—
and these are the words which I stress—
driven to the conclusion that within the present structure of local government there is no prospect of any major reform of local government finance".


So what did the Government do? They appointed a Royal Commission and asked it in its terms of reference to consider "structure, boundaries and functions" but not finance, in spite of what is said in the White Paper. The Government have missed a great opportunity in not getting the Royal Commission to discuss finance.
We are told that it will take at least two years for the Royal Commission to report on structure, and so on. Then there must obviously be an interval for considering its recommendations and having them discussed with the interested parties. Presumably there will then be another Royal Commission on finance and then another interval, and we shall have the next General Election on us——

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. James MacColl): I know that the right hon. and learned Gentleman does not intend to mislead, but he may mislead the House because it has not had an opportunity of seeing his quotation marks. In quoting the terms of reference of the Royal Commission he put "finance" in brackets with his comment. Finance was not in the terms of reference.

Sir D. Renton: I said that finance was not in the terms of reference.

Mr. MacColl: My point is that finance is not specifically excluded in the terms of reference.

Sir D. Renton: That is splendid. I thought that the Minister made it clear this afternoon that the Royal Commission would not be considering finance. If it is intended that the Royal Commission should consider finance, then let it be contained in its terms of reference. Not only would the Commission then know where it stood, but people interested in submitting evidence to it would know that it has a duty to consider financial matters as well. Surely finance and structure depend so much on each other that it would be unwise to separate them.
I congratulate the Government on having obtained the services of Sir John Maud as Chairman of the Royal Commission. He is Master of University College, Oxford, which is the oldest and best college in the country.
The whole tenor of the White Paper was that the rate burden on domestic rate-

payers would be lessened. Certainly, there was no suggestion that it might be increased, even in some cases. May I refer to the paragraphs concerned? Paragraph 7 reads:
The need now is to take such steps as may moderate the harshness of rates over the next few years without prejudicing the outcome of the wider review, to prop up the present system rather than radically to reshape it".
Paragraph 12:
In the short term increasing the proportion of local expenditure met from the Exchequer offers the main hope of reducing the burden of rates and the Government have therefore given particular attention to this part of the field".
Paragraph 17:
The Government propose to devote the great part of this additional grant"—
that is, the new rate support grant which forms 80 per cent. of the Treasury support—
to reducing the rates of householders".
That was the prospectus which the Government put before the electors. There is no suggestion in the White Paper that anyone would be relatively worse off, but I am reliably informed that the County of Huntingdon, and Peterborough, of which I am one of the two Members, will receive less through the rate support grant under the Bill than they receive through the general grant.
Further, I understand that, unless the Bill is amended or unless the Government change their intentions, this new county will be affected worse by the Bill than any other local authority in England or Wales. As a result, my constituents, who already in the past year or so have complained very strongly indeed about high rates, will pay even higher rates, both absolutely and in comparison with other counties, and also in comparison with London boroughs from which many of them came.
The trouble is that the Minister decided to help areas which often had the highest rateable value, namely the London boroughs, at the expense of counties with a much lower rateable value, such as largely rural counties, one of which I represent. We are entitled to ask exactly why the Minister has done so. He has talked a little about highways in the London boroughs, but I do not think that the highway problems of the London boroughs are a sufficient justification for


creating this appalling anomaly in the counties. The Minister should reconsider this matter.
I want now to refer to the special problems of those local authorities which have expansion schemes either under the Town Development Act, 1952, or under the New Towns Act. In Great Britain, there are 70 expansion schemes altogether. Two of them have already been operating for some years in my constituency, one at Huntingdon and the other at St. Neots. We are asked to assume that Peterborough will be the subject of a major expansion scheme, as forecast in the South-East Study. This process of encouraging people who live in overcrowded areas to go and live elsewhere is an established and growing feature of local government. I do not think that it is a feature that should be discouraged. It is inevitable and necessary. In many cases it is to be welcomed, but it creates considerable financial problems, and it creates those problems in spite of the help given under the Town Development Act, 1952.
That help is given and confined to housing schemes only. It is, in effect, a housing subsidy grant and a development grant for housing estates. It stops there. It is paid only to the housing authority. Under the Housing Subsidies Bill, introduced in the last Parliament, a Bill which fell because of the General Election, some further modest relief was offered for house building under development schemes. When that Bill comes into force, as I understand it will some time this Session, it will not apply to greatly increased costs already incurred. It will apply only to costs incurred after the Bill comes into force. So it will help only in the future and will not ease present burdens.
Although these new large housing estates in expansion schemes present their own financial problems which marginally cause rates to rise in early years, those problems are less serious than the educational problems which arise in the counties in which the receiving councils happen to be. Most of those moving in, for example to Huntingdon and St. Neots from London under the town development scheme, are young couples with very young and growing families. As a result, counties where such schemes arise

have a much higher proportion of children of school age in relation to head of population than other counties.
My county is an illustration of this. This year it is already having to spend £29 7s. 10d. per head of population on education, as compared with an average for England and Wales of £28 3s. 2d. It follows that our county rate is also higher than the average—9s. 9d. compared with an average of 8s. 10d. It is impossible to predict how much greater our educational commitment will be in the years ahead, but it will be very much higher still.
The Bill will make it even more difficult for us. With a population of only 180,000, this financial year we shall be spending about £5¾ million on education. In the next five years, to provide the schools needed, we shall have to spend over £8 million, although we have a population of only 180,000. This is too much to ask. Our loan charges for education alone this year amount to £3·7 per head of population. I cannot give a comparable current national average, but the national figure for 1964–65 was £2 a head.
Education is vitally important and new schools must be built. We do not want to deprive our children of the future coming in under these overspill schemes of adequate schools, but neither do we want to increase an already heavy rate burden. Therefore, I think that the Minister should get the Treasury to give him some real support so that he can make the necessary provision.
It is interesting to note that Clause 11 contains special provision for local authorities which are to receive Commonwealth immigrant populations. This is fair enough. Immigration is the greatest social problem of this century and of the next. It is only right that local authorities which have to incur unusually large expenditure in respect of it should receive some help. However, the wording of Clause 11 is strange, because there are some important words of limitation.
The Clause refers to
substantial numbers of immigrants from the Commonwealth whose language or customs differ from those of the community.
Thus, where the language and customs of the immigrants differ, grants may be


given, but otherwise apparently they cannot be. Is this an indirect reference to the increased educational charge due to immigration? I am asking the Joint Parliamentary Secretary rhetorically now, but hope to receive an answer later.
Whatever the answer is, if it is right for a local authority to get special financial help for the education of people coming from the Commonwealth it is no less right for it to get special help for the education of people coming from cities in our own country. If I am wrong, I challenge the Joint Parliamentary Secretary to tell me why when he replies. The Government have ignored the problem of increased educational commitments where there are expansion schemes, and I think it is a problem which must be dealt with.
I conclude by summarising what I think the Bill will do to my constituents. First, it will have an adverse general effect on the people of the County of Huntingdon, and Peterborough. Secondly—I have to state it negatively—the Bill will do nothing at all, in spite of its pretensions, to help us with the large educational costs clue to the expansion schemes. The Minister has been very candid about the Bill. I hope that he has an open mind about it and I hope that when the sour grapes ripen they will be larger and have smaller pips.

6.20 p.m.

Mr. Michael Barnes: The Bill is very important because of the transfer of extra money which is involved from the national Exchequer to local authorities to relieve the very heavy present burden on the domestic ratepayer. The Bill will be welcomed by hundreds of thousands of ratepayers. When it was first written about in the Press I saw a cutting which I checked immediately, because unfortunately the cutting had it wrong and made a great mistake. It said that the Bill was going to halve the rates, and this is not at all the case.
This is an understandable Freudian slip for somebody to make because it is surely a measure of the failure of past Governments—particularly during the 1950s, when the problem became acute—to do something about the whole rating system, that we are not able today to talk about halving the rates. This would be too good to be true, and we are not even

able to talk about halting the increase of rates. We are talking about halving the annual increase in the rates. Having said that, I want to add immediately that I am sure that all Members who represent areas that have been very hardly hit by rate increases in recent years will be greatly encouraged by the determined way in which the Government are tackling the problem.
I do not understand some of the references from the Opposition to the fact that the Government's action in this field does not match up to its words at the time of the General Election. Surely the action which the Government have taken is falling into a very logical pattern. First, we have the two interim measures—the Rating Act, 1966, which gives very substantial relief to those who qualify, to those who are most in need, and now we have this Bill. It will cushion the effect of the increases on the domestic ratepayer, and for the long term the Royal Commission has been set up to look at the whole question of local government reorganisation. From that can come a new system of raising money locally, which I am sure that we all want to see.
My right hon. Friend the Minister said that the Bill provides for a transfer from the national Exchequer of £30 million in the first year, £60 million in the second, £90 million in the third and so on, to cushion the effect of the increases. He emphasised that this was an interim measure and said that he thought that the reform of local government had to come before any reform of the rating system.
Although I accept the way in which the Government are tackling the problem I am a little alarmed at the way in which the new system which we ultimately want seems to be receding a little into the future. The Minister said today that it would take five or six years. I can see that it will be that period, because I have done some calculations, and anybody can do them. The Royal Commission will take about two years to do its job.
Finance is not precluded from its terms of reference, but it is unlikely that in the two years it will be able to get round to detailed matters of rating reform. This is the answer to the question


that the right hon. and learned Member for Huntingdonshire (Sir D. Renton) raised as to why it is not to consider finance. There will not be time if it is to do the main job in two years. Would the right hon. and learned Gentleman not agree that the logical way to tackle the problem is to reorganise local government, and then to decide how to raise money under the new system?
The reorganisation of local government must come first and then there must be a financial review to see how we should raise money locally. One can see how it will be the early seventies before a new system can become operative. I understood the Minister to say at one point that he thought that the reform of the system of raising money locally, when it comes, might take the form of a modification of the rating system or of a different system altogether.
If we are to get away from the regressiveness of the present rating system which he emphasised, we have to move away from the whole basis on which rates are now calculated and towards something much more like a local Income Tax. The patience of ratepayers has been very sorely tried over recent years. Even though they will certainly welcome the provisions of the Bill, they will look for something still more in the years immediately ahead.
There have been some references to the reorganisation of local government in London by my hon. Friend the Member for Erith and Crayford (Mr. Well-beloved). The rate increases in London have been particularly hard to bear. In my constituency, Brentford and Chiswick, in the London Borough of Hounslow, ratepayers have had to face increases of 56 per cent. in the two years since the reorganisation. I think that that is higher than any of the figures to which my hon. Friend the Member for Erith and Cray-ford referred.
The Minister said that until there is a new system of raising money locally we have a choice, either to accept the increases in the rates or to cut back the services which are provided. I am certain that the vast majority of ratepayers do not want to see the services cut back. They want to see them improve all the time, but they also want to see a fairer

way of raising the money that must be raised locally. The Bill is welcomed in that it goes part of the way in the right direction. It provides for the transfer of more money each year from the national Exchequer to local authorities. The more we do this, the fairer the whole thing becomes, because we pay taxes according to our means but we do not pay rates according to our means.
It is in this fact that the inherent unfairness of the present rating system lies. We could all quote examples, such as the case of two exactly similar houses in the same street where the same rates are payable, although perhaps a retired couple live in one while in the other there is a much younger family, with two or three times as much money coming in every week. The 1966 Rating Act was certainly a godsend to such retired couples—those who qualify for the substantial relief which it gives. But one does not have to be earning very much to be beyond the scope of the help which the Act gives. This is especially true of people living in London, who have a high cost of living. When there are big rate increases, they can easily find themselves in very difficult circumstances.
The very outdated nature of the rating system is a measure of the way in which we progress all the time towards a more classless society, because it is an old-fashioned relic of a bygone era, when people were supposed to know their place and one could judge what sort of man a person was, or what his income was, by the house in which he lived. Therefore, it was perhaps a fair basis for taxation in those days.
By today's standards, the rating system penalises large families, with quite a few children, who require a largeish house and who, perhaps, set a high priority on a garden for the children to play in. It also penalises people who set a premium on having as nice a house as possible and who decide what is the most expensive house that they can afford. They consider the monthly mortgage repayments very carefully, and take into account their hire purchase commitments. People like this have found themselves knocked for six by the swingeing increases in rates which they have had to bear, particularly if they live in London.
I now wish to summarise the point which I am trying to make. The part of


the Bill which gives relief to the domestic ratepayer and transfers more money from the National Exchequer to local authorities is a very good thing, because it is an important move in the right direction. If we are not to get a new, fairer and different system of raising money locally for another five or six years, it seems to me that either ratepayers will expect more help still from the Government in the years that immediately lie ahead, or the move towards a new system of raising money locally has to be speeded up considerably.
In devising this interim relief, for which ratepayers will be very grateful, I hope that the Government will not allow the sense of urgency with which they are trying to find a new system of raising money locally to slacken and that they will introduce such a new system at the earliest possible opportunity, because it is the only way in the long term of removing the basic difficulties of the present rating system.

6.30 p.m.

Sir Spencer Summers: In his speech, the hon. Member for Brentford and Chiswick (Mr. Barnes) seemed to follow the pattern set by other speakers from the benches opposite. They have told us that the Bill will be greatly welcomed, that their constituents were suffering grievously from the great increase in rates, and went on to say that no reduction in the rates now paid will follow from the Bil. Their constituents must be even more credulous than they appeared to be at the General Election.
Before I come to my main criticisms of the Bill, there are one of two general points which I should like to make. The Minister alluded to the possible change in the basis of the valuation from what was the theoretical rent to that of capital value, and he appeared to dismiss it more or less out of hand without giving any reason which had induced him to reject that basis of calculation. It would be interesting if the Joint Parliamentary Secretary would amplify what the Minister said on that score, because many people feel that they would be better able to judge the fairness of their valuations if they were related to capital values rather than to letting values.
There seems to be no reason why the criterion for establishing the basis of

rates should necessarily be the same for all types of ratepayer. It does not follow that a house should have exactly the same method of compilation as a factory. It may be that by accepting the principle of differentiation between different types of ratepayer, something more acceptable all round would follow.
Reference has been made to the proposal for the first time to tax unused property at half rates. I am bound to say that I look upon that with considerable suspicion. In the first place, there is every incentive to get unused property occupied. The additional income is obviously an attractive thing for the owner and, secondly, the property tends to deteriorate if it is empty. On grounds of incentive, there seems to be ample evidence to suggest that taxing empty property is not necessary.
If we are going to accept the proposition that assets which are not used and which do not for that reason bring in revenue to the Treasury shall, for some new doctrine, be deemed suitable for taxing at half rate, is that to be the forerunner for cars which are laid up in winter to be taxed at half rate. Are we to suppose that wireless sets and television sets which are left unused in a house while the owner is abroad on a job shall be taxed at half rate? I can see many arguments which might follow from the proposition that unused property is something which the State cannot contemplate and that people must be induced to use it by charging a half rate when it is unused.
On that score, it is welcome that local authorities should have discretion as to whether they use the power now granted to them. I hope that, as he has promised, the Minister will consider amendments during Committee stage to define more closely those empty properties which it might be reasonable to charge at half rate. From personal experience, I know that there are many properties which landlords try to let, without success.

Mr. Dan Jones: Are they asking too high a rent?

Sir S. Summers: Does the hon. Gentleman wish to intervene?

Mr. Dan Jones: If I am invited to do so. Local authorities have to keep services ready for empty houses, and the


owners of those houses would be very angry if the services were not in existence when tenants became available.

Sir S. Summers: The hon. Gentleman has missed the point, but I do not wish to dwell on it. I am saying that there are properties which landlords have attempted to let at reasonable rents. They have not succeeded in doing so, despite their best endeavours, and I see no reason why such properties should be called upon to pay rates at half price.
The main criticism of the Bill is that, whereas ratepayers expected that a reduction in their rates would follow, in fact it does nothing of the kind. Moreover, the limited transference from rates to taxes only affects increases which may follow hereafter.
My right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) alluded to the effect on his county of particular expansion schemes. However, the effect of growing populations may not necessarily come from some such project as he mentioned. There are six counties in the country which are gravely affected in terms of rates because of increases in population far in excess of the general average. I refer to the counties of Berkshire, Buckinghamshire, Hampshire, Hertfordshire, West Sussex and Warwickshire.

Sir D. Renton: And Huntingdonshire.

Sir S. Summers: My right hon. and learned Friend was perfectly right, in his reference to Huntingdonshire, in saying that a very large proportion of those who have moved into the county from London and elsewhere are generally young and require a greater expenditure on education than would be the case for the average person. But there is another factor which affects the educational impact. It is that schools frequently have to be provided before the revenue from the rateable properties associated with the people coming in is available. There is an element of timing which affects counties of that type.
I will not weary the House with statistics from each of those counties. Instead, I will highlight the position by referring to my own county of Buckinghamshire, which is by no means the highest in the list, but neither is it the lowest. Whereas

the average rate of increase in population between 1951 and 1961 was 5·3 per cent., the increase in Buckinghamshire was 25·9 per cent.; in other words, five times the average rate. If one takes the period of 1951 to 1965, the average increase was 3·7 per cent., whereas Buckinghamshire's was 11·1 per cent., or some three times the rate of increase available to the country. Among other things, that has meant that whereas the average rates per household in the country are £30 12s., in Buckinghamshire they are £41 16s.; in other words they are one-third higher in the county. If they are calculated on the basis of rates per head, they are £12 Os. 8d. on average, whereas in Buckinghamshire they are £17 15s. 7d.
If the effect of that situation had not diminished the proportion of the rate bill provided by the central Government, as it has done, in the case of Buckinghamshire it would have meant an improvement of something like £100,000 annually over recent years, and that would have increased in the future.
One of the complaints which we have about the Bill is not only that no account is taken of the situation that I am describing, despite the fact that a deputation submitted full facts and figures to the Ministry in good time; but the effect of the Bill on Buckinghamshire is to make the position worse by about 4d. in the £.
There are other features of the sitution which affect a county such as Buckinghamshire, apart from population. The hon. Member for Erith and Cray-ford (Mr. Wellbeloved) referred to the very high costs in London which, in his view, are accountable for the great increase in rates which he quoted and to some extent justified the special weighting for the Metropolitan area. But the additional costs of the Metropolitan area do not suddenly cease at the boundary. They percolate over it and gradually diminish as one moves further from the centre.
It is quite unreasonable that counties immediately over that boundary should be denied anything of the argument about the higher costs which prevail on the other side of the boundary, which is the case at present. Whilst there may be other aspects of the Metropolitan area to which counties adjoining it would have no claim, there are good grounds for saying that


those counties whose areas adjoin it should have the fact of increased costs recognised by empowering the Minister to include such counties, in his discretion—and, in any case, it is discretionary how much help he shall give on that account—particularly when one remembers that the Schedule I refers to
remuneration in and around the area".
It is particularly poignant that the increased population springs from the overspill from London, particularly in the case of Buckinghamshire, and yet no special help is afforded because Buckinghamshire is affected by the higher costs immediately next door. It would seem to be a very powerful argument to point out that the difficulties of the ratepayers in Buckinghamshire are brought about by the transference of population from London. whose higher costs are reflected in Buckinghamshire.
One of the changes to which the Minister referred is that affecting highways. I would submit that the criterion of milage alone may give rise to unfairness in calculating the element to be included in the rate support grant. Traffic volume should also be taken into account.
I have referred to the case for the Government considering a supplementary payment for counties especially affected by increases in population, and that is only fair if, in the scheme as we have it in the Bill, counties whose rates are below the average are to get special assistance under the Bill.
For some time there has been criticism that the effect of that is to modify a situation that is far too disproportionate and should, therefore, be abolished. If, however, it is to continue, it would seem to be only fair that certain of the counties whose rates are so adversely affected should have some assistance from the relief which could be afforded to those whose rates are very much below the average.
A strong case was made by my right hon. and learned Friend the Member for Hexham (Mr. Rippon) for saying that much greater transference from rates to taxes should have been included in the Bill. I do not want to go over the ground a second time, but I wish to add my voice to what has been said that the transference envisaged under the Bill is

grossly inadequate to deal with the present situation. The figures which have been quoted from the opposite side of the House serve only to confirm the need for further transference than is envisaged under the Bill. Far too many people have far too big a burden to carry and far too few will get adequate relief under the Bill.

6.46 p.m.

Mr. Arthur Jones: I was very much in sympathy with the views expressed by the hon. Member for Brentford and Chiswick (Mr. Barnes), but I could not follow him in saying that the review of local government could, to the extent that the hon. Member suggested, be divorced from the financial considerations. Unless one ends up with new local authorities which are financially viable, and if one divorces the financial considerations from administrative considerations, I am sure that we are likely to meet an extremely difficult situation. Although the financial considerations are not excluded from the terms of the Local Government Boundary Commission, I hope that the financial considerations will play a substantial part and will be included extensively in the review proposals.
There is widespread concern among local authorities generally at the way the Government's proposals in the Bill have been hurried. Many of the changes are fundamental. Understandably, the Government are working to a timetable, but this has been so restricted that the local authorities who have been expected to play their part in the discussions have been presented with only the barest possible outline of the Government's proposals and the financial implications which follow.
The Minister has given no grounds of substance for the change in the method of grant support under the Bill. We are to have these changes, but no reasons for them have been advocated. Some of the financial considerations which lie at the very root of the proposals are completely inadequate and the definitions extraordinarily vague.
I applaud the introduction of a grant system which is designed to keep the growth of rates broadly in line with the growth in the economy as a whole. I am sure that this is a requirement; it


is a difficult operation in which to succeed. I am pleased to see that a start has been made. When, however, we turn to the 54 per cent. figure of the Exchequer contribution based upon the 1963–64 figures, we must satisfy ourselves as far as we can that we start from a sound basis of calculation. From the information that comes to me, I am not at all sure that this datum line has been adequately and satisfactorily determined. There appears to be considerable doubt upon the reliability of the figures which are being used and the adequacy of the figure of 54 per cent. as a basis for calculating the grant for 1967–68.
There have been a series of estimations of the effect of the introduction of the needs element under the proposed rate support grant, and various figures have been suggested this afternoon of the effect that these proposals will have in varying degrees upon counties. Am I right in saying that to some counties the grant will mean a higher rate of demand from ratepayers than the 5d. which is promised as help to the domestic ratepayer? The Joint Parliamentary Secretary is, apparently, deeply engaged in another discussion, and I shall repeat the point presently when he has an opportunity to listen to what I have to say.
I repeat my question. Under the new system of computation, will some of the counties be adversely affected to a greater extent than the 5d. help that they are to get for the domestic ratepayer? In other words, will the computation for some counties mean that they have to levy a rate of more than 5d. right across the field of their rate demand? The Minister is nodding in assent to my suggestion——

Mr. Crossman: No. I was nodding in recognition of intelligibility when I heard it.

Mr. Jones: That is high praise from the Minister in what he recognises to be an involved subject. I suffer, perhaps, more than he does from the disabilities that are inherent in the subject.
It is, I think, true that, on the other hand, some counties will make substantial gains. I do not propose to quote the figures which I have with me, but the Greater London Council, for example—and this is the point which was raised by the hon. Member for Erith and Crayford

(Mr. Wellbeloved)—will be a benefactor to the extent of a substantial number of millions of £s.

Mr. Crossman: Beneficiary.

Mr. Jones: Yes. But although we have a beneficial effect in some quarters, there is a loss effect in others. This was not brought out clearly in the Minister's speech.
May a plea be made that if the 54 per cent. grant figure results in a disadvantageous position for a series of authorities, they shall be no less better placed after the introduction of the new system than they are at present? Or will the Government accept the situation that they are promising extended relief to the domestic ratepayer which local authorities, because of the incidence of the new grant aid, will not be able to make effective to domestic ratepayers, because that is, in effect, what will happen in many counties under these proposals?
I turn to the question of definition under the Bill. This may be a minor point, but it refers to trading accounts and to the need for their exclusion. I understand that for trading accounts there is no definition; there is no set pattern in local government to produce the answer of what is or what is not a trading account. That cemeteries and crematoria are included in trading accounts has, I understand, been a municipal joke for many years. It is doubtful whether there is any profit in the accepted sense of the word in this type of essential service. Some authorities include under this heading catering activities in parks, and so on. It would be interesting to know how seaside authorities treat the hire of deck chairs. On the other hand, I understand that services which are not treated as trading include car parks, car-parking meters, municipal hostels and the provision of laundries and swimming baths, together with public halls and show grounds. Water presents a particular problem. The purpose of my argument is that there is inadequate information and inadequate definition to enable local authorities to see clearly the effect that the Government's proposals will have on their financial resources and the demands upon the ratepayers.
I am grateful to the Under-Secretary of State for the Home Department, the


hon. Member for West Bromwich (Mr. Foley), for being in his place and giving me an opportunity of putting to him my final point, which was raised earlier by my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton), concerning immigration. Clause 11 of the Bill proposes the provision of a grant for certain expenditure due to immigrant population. It is clearly the Government's intention to assist local authorities in areas where Commonwealth immigrants have settled. It would be interesting to learn from the Minister how it is proposed that local authorities which fall within this scheme shall be identified. I have not seen any system of identification in this respect. What is to be the basis of assistance and how is it to be assessed? The Government's aim will surely be to encourage local authorities to extend their services where this is necessary or where a worthwhile improvement can be made.
Many authorities have already incurred substantial expenditure. Many housing authorities use their housing accommodation for the benefit of immigrants. The public health services are under substantial pressure where there is any degree of immigrant population. Is it suggested that where local authorities have gone forward in this work, their circumstances shall be given special consideration? Is the system of help to be such that local authorities can be assured of reimbursement?
The Government's requirements call for identifiable staff engaged on this work. Does this mean that a proportion of a local government officer's time can be allocated to work with immigrants? I am glad to see the Under-Secretary giving his sign of assent.
Would it not be considered preferable to suggest a per capita grant system? This may be contested, but in my view the number of immigrants in any local authority area is the truest indication of the pressure upon local government services. I do not consider it right to try to assess the demand on any other basis.
Much of the work that has already been done may be an easement to the problem. If one is concerned only with the proportion of an officer's time that is spent on the work, one is disregarding the amount of work in this direction which a progressive local authority has already

achieved. It would seem to be worth while to give local authorities grant on the basis of a per capita system. This would in no way be an open-ended arrangement, although it would call for periodic returns of the numbers of Commonwealth immigrants involved. This in itself would surely be a useful addition to the information which may be at the Government's disposal.
The emphasis in this debate has been upon the inadequate consideration which has been possible by the local authority representatives, the lack of information and the uncertainty of the datum line upon which all the Government's calculations of the 54 per cent. have been made. I am confident that there is a rewarding prospect for the Bill in Committee.

7.0 p.m.

Mr. Jack Dunnett: In common with my hon. Friends, I greatly welcome the Bill. It is another step in the progressive easement of the local burden of rates on the population. The Bill does not go as far as we would all like, but it is one further step towards the policy which the Government have enunciated, and which they are carrying out. I shall not dwell on the question of the burden of rates on residential ratepayers. This has been elaborated, and we all know enough about it.
I should like to applaud, in particular, two parts of the Bill. First, the relief to be provided for the domestic ratepayer. We should all like to see some provision which would ensure that rates would not increase at all, but I suppose that in a hard world such as this we cannot have such a guarantee. It is at least something probably to halve future increases in rates which are due to the unfortunate built-in increases which seem to be inevitable.
I welcome also Clause 11 which deals with the burden on local authorities with large immigration populations, and, following the remarks of the hon. Member for Northants, South (Mr. Arthur Jones), may I say to my hon. Friend the Member for West Bromwich (Mr. Foley) that my constituency has a large number of Commonwealth immigrants, and that if he has any influence in disposing of this additional grant I hope he will look kindly on us.


Older parts of the larger cities tend to attract immigrant populations, because it is here that they find the only sort of property which they can acquire easily, or the only property in which they can get accommodation. It is these parts which have had a run-down, in particular, in the educational services, and the projections of local authorities, including those in Nottingham, have not provided for an increase in the number of schools, particularly primary schools.
In addition to the non-provision of schools for the future, the large number of Commonwealth immigrants with an increasing proportion of young children of school age are thrust on inadequate facilities. I hope that this is one of the factors which will be taken into account when specific grants are made under Clause 11.
Furthermore, a greater number of social workers is needed in areas such as those to which I have referred, and in this respect I applaud the new specific grant, because it will benefit not only Commonwealth immigrants themselves and their children, but also what I refer to as the so-called indigenous population, because the increasing pressure on already inadequate social facilities is having a detrimental effect on their future careers and lives.
I have two suggestions to make to the Minister. There is no mention of specific grants for dealing with non-conforming industrial and other users. This again arises in respect of the older parts of our larger cities. The cost in some areas of London, and in Nottingham, of removing non-conforming industrial users is quite fantastic. This means that such users are allowed to persist, purely for financial reasons. if so many other specific grants can be made, I ask my right hon. Friend to make a specific grant for this purpose also.
I wonder also whether the provisions under which an increase in expenditure over a period can be considered only where there are what one might call inflationary reasons can be extended to include increases in the cost of service due to an unexpected or unusually high expense on a particular service? As I understand it, the estimates on which the grants are based are computed for two

years, and probably computed six months in advance of any such period. After eighteen months a new service may be found to cost much more than expected, but no account can be taken of it until the two years have expired, unless the increase in cost is due to an inflationary element as distinct from the element of a new service.
I imagine that many other hon. Members wish to take part in the debate, and I shall say no more except to repeat that I heartily commend this Bill to the House.

7.5 p.m.

Mr. R. Bonner Pink: Unlike hon. Gentlemen opposite, I find the Bill disappointing. It is disappointing, first, because in view of what the Minister has been saying over the past few months I expected a complete new structure of local finance. But I suppose it is not quite so unexpected when one realises that the rating system has been in existence for nearly 400 years—I believe it was first introduced during the reign of Queen Elizabeth land one would hardly expect, therefore, a revolutionary new system to be devised and introduced overnight. We now know that we must await the report of the Royal Commission, and I hope that the Commission will be successful in finding an alternative to the rating system which I think we are all agreed is unsatisfactory in many respects.
I think that the Bill merely tinkers with the existing rating system. The new grants are substantially the same as the general grant and the rate deficiency grant, and, while I welcome the increase in the total sum, I feel that this is not enough in view of the large annual increase in the rate poundage. We cannot tell exactly what effect the Bill will have until the prescribed sums are known, but in general this Measure appears to favour urban districts, or urban areas, at the expense of rural areas, and as a representative of a county borough I naturally welcome this.
I propose to comment on one or two features of the Bill, and to deal first with the question of school milk and meals. I wonder why the present grant system is to be stopped. It seems to be a satisfactory system, and it has worked well. Is it that the number of meals is increasing beyond the increase in the number


of school children? I think that this is a service which should remain on a national scale, and should not be dependent on local finance, because there could be a tendency for local authorities to skimp a little on this service.
On the question of the reduction of rates on housing, I am glad to know that the full cost of derating for householders will he met by Government grant, because, as I read the relevant paragraph in Part III of the First Schedule, it seemed to me that it would only be in proportion to the national average. I hope 'hat I am wrong about that, and perhaps the Minister will confirm that the grant will cover the whole cost of derating.
There is much to be said in favour of the principle of rating empty property, but I think it is clear that it will be very costly lo administer. As the Minister said, file object is not financial. I do not think that the proposed provisions are entirely satisfactory. After all, it takes time to sell a house, even at a proper price. It takes time for the legal processes to be worked out. It takes time for mortgages to be negotiated, and so on, and a person buying a house may find that his three months have nearly been exhausted by the time he actually gets possession. He may then find that he has to carry out redecorations, and so on. Would not it be fairer if the three months were for each owner, and not for each void. On the question of the maintenance of roads, for a long time county councils have had grants towards the cost of road maintenance, whereas county boroughs have not, and I am glad to know that the Minister proposes to put them on the same basis. Can the Minister tell us what the grant will be for principal roads as they will be called under the new designation? I do not think that he gave a percentage figure in his opening remarks.
One small point which affects my constituency relates to grants for land improvement and reclamation. We are in the process of reclaiming tidal mudlands and saltings on our boundaries, and I would be grateful if the Minister could see his way to including this type of reclamation in subsection (1,a) of Clause 9.
The matter of major importance to my constituency is really, in effect, the continuance of the rate deficiency grant. We are probably not alone—many other

county boroughs are in a similar situation—in that, due to redevelopment, reclamation of war damage and slum clearance, we are in effect exporting population. The result is, of course, that our ratable value per head of the population is going up. On paper, therefore, we are becoming better off but in fact we are becoming poorer. Our present position is such that, if our population dropped by a further 3,000 people, we should get no grant under the present rate deficiency grant. Would the Minister consider that problem also? It must affect other cities than mine. Would he also consider introducing some weighting factor in the same way as is done for counties with low densities?
I feel that the Bill is disappointing because it does little to solve the problems of local authorities and to appease the frustrated ratepayer. I hope that the Minister will take note of the points which I have raised.

7.10 p.m.

Mr. Gordon Oakes: I am sorry that the hon. Member for Portsmouth, South (Mr. Pink) is disappointed with the Bill. He has admitted to the House that immediately before the Royal Commission even sits to report on the structure of local government it would be unwise, even if it were possible, for this House to present a Bill which was a cure-all for all the problems of local government finance. I do not think that it was ever promised by my right hon. Friend or any hon. Member on this side of the House that a system which, as the hon. Gentleman mentioned, came into being at the time of Queen Elizabeth I, could be so drastically changed that a perfect system of local government finance could be produced in a matter of days. Surely, no such promise could ever be made by any sane man nor was any such promise made by any hon. Member on either side of the House.
I would follow the hon. Gentleman on one point, which disturbs me as well. I should like my right hon. Friend or the Parliamentary Secretary to deal with the question of school meals and school milk. I had always thought that the grants for school meals and milk had worked fairly well on a national base. It was a very simple system of granting aid. It has resulted in Britain having a population of young children who are


probably healthier than those of most other nations.
Local authorities could, I fear, skimp on this essential provision unless very tight Regulations were laid by the Government to see that that did not happen. They would ensure that children were not affected by having either less milk or smaller meals, and that those children who need the milk and the meals most would not be prejudiced by having to live in the area of a local authority which was not sufficiently generous. I say that because, like the hon. Member for Portsmouth, South, I should like an explanation of why it was felt necessary to deal with this specific grant and eliminate it when it appeared to be working so well.
My hon. Friend the Member for Erith and Crayford (Mr. Wellbeloved) dealt in dramatic detail with the effects which he alleged hon. Gentlemen opposite had had in their designs upon London. At one point he accused hon. Gentlemen opposite of rape, but suggested that they were frustrated in their attempts, so they are presumably guilty only of attempted rape.
I want to talk about no such passionate subject, but about the neglect and decay in industrial towns in the north of England, towns which could be materially helped by the Bill's provisions, particularly the specific grants. Clause 7 deals realistically with a modern problem, one which faces many local authorities, particularly in the north—how to get rid of slums, dirt and derelict land, how to re-create a town, to make it a modern town and a fit place in which to live.
One of the biggest problems for local authorities engaged in such redevelopment schemes is that of finance. Clause 7 of the Bill gives the Minister power to make Regulations which can materially assist towns engaged in redevelopment projects. I appeal to my right hon. Friend and to the Treasury—such Regulations can be made only with the consent of the Treasury—to be most generous in making these Regulations and in the amount of money made available under the Regulations to towns such as Bolton, which I represent, and to so many towns in the north of England, where vast redevelopment schemes are afoot and are prejudiced by lack of money.
We had a debate in the last Parliament on compensation for owner-occupiers of houses affected by slum clearance schemes. I hope that the Regulations and the money available under them can do something to assist such owner-occupiers. Although that Act created the provision of compensation where none would have existed otherwise after 13th December, 1965, the position is still far from satisfactory. It still gives rise to tremendous anomalies. There are examples still of two houses with different rates of compensation next door to each other. It gives rise to great confusion, often among the older people of a town when it is redeveloping and they are not certain what money they will receive. Of course, the local authority must provide the money for the compensation of such owner-occupiers.
The position is even worse for the small shopkeeper, because at the moment the law on compensation is in chaos—largely the chaos of the financial effects. Everyone is worried about where the money is coming from. We all worry about where the money is coming from. I hope that, by these Regulations, my right hon. Friend will be sufficiently generous to allow local authorities which are redeveloping to provide adequate compensation in all cases where the home owner is thrown out of his home by necessary redevelopment.
The Clause replaces Section 184 of the Town and Country Planning Act of 1962. So far as I am aware, that dealt only with redevelopment in war-damaged areas and certain redevelopment of land affected by subsidence caused by the workings of the National Coal Board. It would be interesting to discover how much money, if any, has been paid out by the Treasury under the provisions of Section 184 of that Act. The real need today, which Clause 7 recognises, is the need for providing money for local authorities engaged on a general clean-up to make their towns better towns in which to live.
Clause 9 allows local authorities to spend money on reclaiming derelict land, often in the middle of the town, which is also essential in northern towns. Section 11 has been referred to by my hon. Friend. It also is vitally important in many northern towns where there is an immigration problem. This is not always a coloured immigration problem, but often concerns a population of Hungarians or Polish people as well as people


from the Commonwealth. The local authorities will now be able actively to persist in the integration of these people in the community. Consequently, officers of the authorities can be appointed to do this work. If they are appointed, the local authorities will need money, and the local authorities must find the money.
This is a national problem, just as redevelopment and derelict land are national Problems. Therefore, it behoves the nation as a whole to assist local authorities to carry out these essential tasks in a modern age. I applaud the Bill because it takes a realistic view of many of these specific grants.
It is often the poorest authorities which are least able to bear the burden of slum clearance, redevelopment, derelict land and immigration. This Measure seeks to redress the balance on a national basis and I therefore applaud it.

7.20 p.m.

Mr. Charles Morrison: Perhaps the main criticism of the Bill is its tacit admission that nothing major can be done to relieve the burden on ratepayers in the foreseeable future. There has, consequently, been running through the speeches of my hon. Friends and of many hon. Gentlemen opposite the theme of disappointment.
The hon. Member for Bolton, West (Mr. Oakes) began by saying that no promise of rate relief had been given by his right hon. Friend. I cannot remember every word uttered by the right hon. Gentleman, but I urge the hon. Gentleman to read his party's last two General Election manifestoes.

Mr. Oakes: I said that my right hon. Friend had not promised a cure-all for all the problems of the rating system. This Bill is designed to give relief, but not to be a cure-all. One would not expect it to be.

Mr. Morrison: Nevertheless, the party opposite promised early relief in its last manifesto. The hon. Member for Bolton, West implied disappointment with the present position. Like Oliver Twist, implicitly he asks for more, but I am afraid that he will get very little joy in the near future.
The Minister said that the Bill was the second half of a two-pronged attack. I

will only say that it is a very weak attack. The Measure is the second bite by the Government at an extremely dried-up cherry and provides a very different picture from the succulent fruit of rating relief and reform depicted by the Labour Government as long ago as 1964.
I have no doubt that Labour's specific promise to seek to give early relief to ratepayers and to transfer the larger part of the cost of teacher's salaries to the Exchequer was taken by most people to mean that their rate demand would be cut. Now, two years later, rates have increased by one-quarter and Labour's promise has been amended, so that in its 1966 manifesto we read:
When our reconstruction of local government has been completed, we shall introduce major reform in local government finance.
Presumably that referred to a reconstruction which will, or may, take place as the result of the recommendations of the Royal Commission. However, that Commission will not report for at least two years, so that if we are to await legislation and consequent reconstruction before there are any financial changes—as has been implied several times this afternoon—it is hardly likely that there will be any major changes in the rating system before the next General Election. Perhaps when we get to that stage the Labour Party will fall back on its 1964 formula of early relief with which to entice people. I am inclined to think that that was confirmed by what the Minister said earlier.
In the meantime, we have been presented with the Rating Act, 1966, and now we have this Measure. The Rating Act had an estimable purpose—some relief for the poorest ratepayers—but the means of achieving it were odd, to say the least, for far from all the relief coming from the Exchequer, 25 per cent. of it came from the huge majority of ratepayers, many of them equally as hard pressed as those being relieved.
The truth is that the Rating Act was a very minor Measure introducing only the most limited relief but no fundamental reorganisation whatever. Today we are debating a Bill which will be similar in its effect. It follows the White Paper published in February, and that was a defeatist document if ever there


was one. The Times dubbed it "a mousy little thing" and stated:
It proposes some alleviation of symptoms and abandons the search for a remedy.
Thus we are debating what is, once more, an interim Measure. If it were not an interim Measure there would be an immediate and serious objection to it in that, by progressively enlarging the Exchequer grant in the total of local authority revenue, it threatens to reduce steadily what remains of the independent initiative of local councils. This is one of the dilemmas of local government financing; increased grants and reduced independence, or retain grants at their existing levels and provide no relief whatever to the ratepayer. To this dilemma there can be only one solution, which is an alternative means of raising local government finance.
I recommend to the Minister a study of the Private Member's Bill which was introduced last Session by my hon. Friend the Member for Norfolk, Central (Mr. Ian Gilmour), who had some good ideas on the subject of local government financing and who made far-reaching proposals in his Bill. It will be interesting to see how near the Royal Commission's recommendations, when we finally see them, come to those proposals of my hon. Friend.
As things are, this Measure is only a temporary stop-gap and, as such, it is difficult to disagree in principle with its main provision, the rate support grant. It is not so different from the system which it replaces and this has been admitted by the Government. One wonders, when the Minister apparently considers that the present structure of local government finance is doomed in any case, why he considers it worth while to introduce this minor amendment because he could have achieved very nearly the same objective, of providing relief for ratepayers, merely by increasing the general grant.
There are certain practical aspects of the Bill about which fears must be expressed. The first is an administrative point which was referred to by my hon. Friend the Member for Northants, South (Mr. Arthur Jones). Under the new proposals each type of local authority, county district councils as well as county and county borough councils, will have to

submit estimates of expenditure for two-year periods so that an estimate of total expenditure can be built up from which can be calculated the aggregate grant total. But for this purpose the estimates must be obtained 12 to 15 months in advance of the year to which they apply.
If the new system is to come into effect by April, 1967, councils should have been working on their estimates for some months already. As I understand it, they have received no guidance from the Government about how their proposals are to be implemented, with the result that now they will be faced with an intolerable and impossible administrative burden. Once again, the Government have put forward a hastily drawn up Measure and I hazard a guess that they have not consulted with or listened to the local authority associations about the practical application of these proposals to the extent they should have done.
The second aspect about which I am concerned is more serious and was referred to by my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton), my hon. Friend the Member for Aylesbury (Sir S. Summers) and others. It seems certain that the share of rate support grant to some county councils will be less than they would have received under the existing general grant system. Therefore, the new system might well result in higher rates for some counties than at present.
This may be aggravated in that, in the past, county boroughs have not received grants towards maintenance of their highways. It may be excellent that, under the Bill, they are to do so in future, but, if they are, extra money must be provided for what is, in effect, a new grant. The position is again aggravated by the fact that the overall redistribution of grant money will help some areas like London, probably to the disadvantage of the counties.
I have referred to the disadvantages to the counties, but this, in effect, means to the non-county boroughs as well and is of particular and unpleasant relevance to counties such as Wiltshire, which have not only a number of relatively small non-county boroughs, but, of even more importance in this context, fast-growing towns like Swindon. The new grant system could well have a serious effect on


the development of that area and others like it. Too often already, there is occasional friction between counties and non-county boroughs regarding the provision of services and, if the new system is to result in a decrease in the grant, this can only exacerbate the situation.
On the specific grants, I make one comment about the grant for public open spaces. As the years go on, leisure time will increase, or should increase, and it will at least have better use made of it. Thus, the provision of open spaces will become steadily of more importance. But it seems that, if present administrative arrangements continue, there will at some time be a growing overlap of responsibility for recreational provision of all sorts between the Ministry of Housing and Local Government and the Department of Education and Science.
Recently, there has been set up as an offshoot of the National Sports Council a number of regional sports councils, and they have some responsibility, under the Department of Education and Science, for planning for recreational provision of all kinds. There should be a review of this whole problem because it will undoubtedly grow, and such a review should be from the point of view both of efficient administration and spending and of planning for the provision itself. I want the Parliamentary Secretary to comment on this matter when he winds up.
This is not a Bill over which I can become very excited or enthusiastic. There are 45 pages and 37 Clauses of it, but its net result will be very little different from that provided by the existing system of local government finance. Marginally, some authorities will benefit while others will suffer. I am sorry that we shall have to wait so long for more far-reaching measures, and I am certain that all ratepayers share my sorrow. In the meantime, local authorities will have to waste time learning the intricacies of a new system the life of which, in any case, is limited.

7.32 p.m.

Mr. Roy Hattersley: I add my general welcome to the Bill, especially so since it provides a slight change of emphasis from the rate-borne to the tax-borne element in local government finance. But I shall confine myself entirely to the provisions of Clause 11 and what it is promised to do

for those local authorities which have special needs arising from the concentration within their boundaries of immigrants from the Commonwealth.
In a sense, I take exception to the wording of Clause 11, particularly in the first sentence, which, incidentally, takes up 10 lines. Special grants are to be made available where necessitated by the presence within local authority areas
of substantial numbers of immigrants from the Commonwealth whose language or customs differ from those of the community".
I object to that not only because it is prolix even by the standard of Government Bills, but because there is a clear implication in the words I have quoted that immigrants from the Commonwealth thus described are not themselves members of the community.
I hope that, in Committee, an adjective will be found to precede the reference to the "community" to make quite clear that the intention of the Bill—I know very well that it is the Government's intention—is to make them what they are or what they should be; that is, full and free members of the community as a whole. But that is a marginal objection. Basically, I welcome the Clause. It must be much welcomed by all hon. Members on this side who have within their constituency boundaries appreciable numbers of Commonwealth immigrants.
This is the first time for almost a year when a debate or a Bill on the Floor of the House has directly concerned immigration. There was a time when we seemed to be preoccupied by it, when we debated it in one form or another week by week and month by month. But we have now moved from the emotional, indeed hysterical, phase of immigration politics into the more practical realm of the work of which Clause 11 represents one vital aspect. Inevitably, with more action there is less talk.
Clause 11 is part of the implementation of the third section of the Government's White Paper on Immigration, published 11 months ago. It was a much maligned document, almost as maligned as were the people who sought to support it between its publication in August, 1965, and the beginning of this year. But those of us who believed it essential to do something to make integration and absorption possible supported Part III


of the White Paper then and support now this second step in its implementation.
I call Clause 11 the second part of the implementaton of those policies because the first example of special help being offered to areas with a high concentration of immigrants was the additional assistance announced in February for housing authorities with particularly pressing slum clearance problems. By and large, they are immigrant areas, and by and large they will benefit. Moreover, they are the areas which will have the most benefit and assistance from Clause 11 of this Bill.
The Clause gives the Home Secretary wide powers of discretion, after consultation with the Treasury, in deciding how the special grants, qualification for which must be demonstrated by specific expenditure, are to be made. I make the plea that that discretion be exercised as widely as possible. It is, perhaps, out of the question to specify in the Bill or anywhere else the exact terms of qualifying expenditure for grant aid under this head, but I emphasis how important it is that the Clause should be administered and its benefits passed on to local authorities with the greatest possible generosity. It is vital that money could be provided under the Clause for some services which the unenlightened would regard as essentially peripheral both in education and in health.
I take my examples almost entirely from the problems of education in immigrant areas. I very much wish that the right hon. and learned Member for Huntingdonshire (Sir D. Renton), who made some reference to this in his speech, were now in his place. He asked why special assistance was to be provided for those areas into which immigrants from the Commonwealth had come in large numbers. Do not the same problems arise, he asked, in local authority areas into which immigrants from other parts of the country have come in large numbers? The right hon. and learned Gentleman spoke so often in the House about immigration in 1964 and 1965 that I should have expected him to know the answer to his question. I wish to put it clearly and firmly on the record, reminding the House of some of the special problems which arise and of the need to interpret Clause 11 in the widest possible way.
I do this with some trepidation, because I know very well that to enumerate the problems of constituencies like mine, with 30 per cent. of its inhabitants immigrants from the Commonwealth, is to court the accusation that one is emphasising the problems for most unworthy reasons. I shall try to enunciate them as objectively as I can, and as sadly as I can, emphasising, with the Milner Holland Report, that the immigrants who live in my constituency are very largely the victims rather than the cause of our social malaise, and emphasising, also, that I am drawing these matters to the attention of the House in the hope that Clause 11 will in due course be interpreted in the widest possible way.
There are in my constituency schools in which 30 per cent. of the children speak no English at all. There are schools in which 50 per cent. of the children speak English in a quite minimal way. Also—this is probably more important, and it is the central issue which I put before the House and the Government—there are schools in which 70 or 80 per cent. of the children have really no experience of English customs and English mores.
I hope that, when the money under Clause 11 is distributed, the Secretary of State will bear in mind that, as well as providing smaller classes in which English can be adequately taught, as well as providing extra visitors to remind parents of their new obligations in Great Britain, it is essential to make provision to teach these children basic British customs, basic British habits and, if one likes, basic British prejudices—all those things which they need to know if they are to live happily and successfully in an integrated way in this community. The United States has discovered the need for this sort of education after 150 years, and, in Operation Headstart, is beginning to teach under-privileged children the basic social customs which they need to know if they are to be free, happy, and prosperous members of society.
I hope very much that the special grants under Clause 11 will be available for teaching in that sense as well as teaching in the more formal sense. The immigrant areas are usually areas where the schools are too old and the classes too crowded. But as well as the great


problem of providing formal education, there is the need for formal instruction of both the children themselves and their parents. Again, I ask that a very wide interpretation be given to the Clause when money under it is offered to certain local authorities for disbursement.
I ask, also, for a similarly wide interpretation to be given when money is made available for health and housing services. As well as the routine jobs of making sure that overcrowding legislation and health regulations are properly observed, there is here a great work of education and encouragement to be carried out. I know from my own experience in Birmingham that those who carry on this work with immigrants, who are there to give informal advice and assistance, and to persuade as well as to teach, are often regarded by the unenlightened as unnecessary and unimportant. Again, I ask that the grant shall be made available for this purpose.
I welcome the grant, because this is the first occasion when money has specifically been set aside for authorities which suffer from this problem. There is a tendency to believe that general help for the twilight areas and general help for areas with multi-occupation of old property and with old schools will itself solve the immigration problem. This is why I very much welcome the proposal that the grant should be tied to specific jobs done by specific people demonstrated to exist before money is provided.
We have passed through the phase when it was possible to say that, if we cleared the slums in general, some immigrants would benefit and that, if we reduced the size of classes in general, many immigrant children would be better educated. We have reached a point when, if we genuinely believe in integration and in giving all the citizens in our great towns the right to live freely and equally, some of them must be given special help. The passing of Clause 11 will be the first occasion when the House has specifically agreed to do this.
I welcome the Bill for many reasons, but principally and overwhelmingly because of Clause 11.

7.45 p.m.

Mr. Oscar Murton: Even allowing for the partisan approach of hon. Members opposite, which I can quite

understand, I find that they put a very great gloss on what I consider, and what I am sure my hon. Friends consider, to have been a very disappointing performance by the Labour Government in rate relief in the last two successive Parliaments.
First, in what we now call the short Parliament, after doing nothing at all in the first Session, except to make specious promises, in the 1965–66 Session the Goverment produced the Bill which eventually became the Rating Act. The intentions underlying that Act were good in that it set out to help the poorest ratepayers in the country, but where the right hon. Gentleman the Minister fell down on his job was by burdening local authorities with finding 25 per cent. of the cost, thus striking at the pockets of those ratepayers whose incomes were only marginally greater than those eligible to receive help. Here, again, we have a Bill whose intentions are good, but, again, the Minister has failed to grip the problem firmly and comprehensively. It is just one more stopgap Measure.
The right hon. Gentleman may not have been flattered during February and March of this year by a number of references which associated him with that homely creature the mus musculus, which causes most women to scream and all householders to trap. The house mouse, for I gave its Latin name, figures very much at this time in the Minister's life. The Times, for instance, called this de-rating provision of his a "mousey little thing" and the Local Government Chronicle wrote of "Mr. Crossman's mouse". The fact is that on the subject of local government finance the Minister and his party are as easy to trap as is any mouse. The only bait required is a General Election, when big pronouncements are made. To quote one:
When our reconstruction of local government has been completed, we shall introduce major reforms in finance.
That was in Labour's election manifesto in 1966.
The Prime Minister himself on 9th November, 1965, with exemplary frankness, made a statement which has been and will be quoted time and again from this side, when he said about finding an alternative to the present rating system:
We all hope that someone will stumble on the secret some day, but I cannot say that


a satisfactory alternative source has yet been discovered."—[OFFICIAL REPORT, 9th November, 1965; Vol. 720, c. 46.]
In an endeavour to find that satisfactory alternative source, the Government have seen fit to set up a Royal Commission on the structure of local government. The House has not yet heard the terms of reference of the Commission. The only hint which we have had has come in the White Paper Cmnd. 2923. But in my view it is absolutely essential that both structure and finance should be considered as one problem. If this is not done, we may well find that we are no better off in two years' time than we are at present, with another string of promises from the Treasury Bench and further temporary legislation introduced to ameliorate the effects of soaring rates, while yet another Commission is set up to find a new method of raising finance which can be grafted on to the new local government structure.
What I want to say in respect—and I cannot emphasise it enough and I hope that the Parliamentary Secretary will give us an assurance or at least some idea of what is in the Government's mind—is that when the Royal Commission is set up its terms of reference will include this vital question of finance as well as that of administrative structure. One makes a nonsense without the other. They must be taken together, or much more time will be lost than will be lost while the present Royal Commission is considering what to recommend to Parliament.
I wish to make one or two short, but particular observations on the Bill as it affects most South Coast towns and, in particular, the non-county boroughs such as my own constituency. In Part I it is proposed to taper off now the Conservative Party's Rating (Interim Relief) Act, 1964, which was not due to expire until 1968. The Minister realises, I think, that to repeal the Act entirely now would cause rates to rise sharply in certain areas, particularly along the South Coast. Indeed, a Government Press release on 18th May made this very point—that a sudden ending would involve a sharp increase in rates for a small number of local authorities. That was something of an understatement, because the Exchequer grant of £5 for each person

over 65 years in excess of one tenth of the population of the area concerned in the case of Poole amounted to about £30,000.
As it is, the direct consequence of the Bill, which alters the formula to £5 for each person over 65 in excess of one fifth of the population, will cost the ratepayers of Poole the equivalent of a 1½d rate, because where, previously, 16,000 elderly people enabled the borough to claim 6,000 at £5 a head, Poole now falls short of the 20,000 minimum which will be required as a result of the change in the formula. In all equity, I would hope that the rate support grant would compensate this and similar local authorities fully for their loss under the new provision during the next rating year.
Will the Minister confirm that they will be compensated? I also hope that he will now do something to compensate such local authorities along the South Coast for having to bear 25 per cent. of the cost of the Rating Act, 1966, for the same set of authorities are the worst hit under that provision, too.
In Part II of the Bill there is the Government's previously announced decision to postpone the 1968 quinquennial revaluation. This is a decision which will have the most serious consequences. The postponement of the 1961 revaluation until 1963 was bad enough in its effects on householders, but at least there was then the valid and very good reason for postponement that the Inland Revenue at that time was of the opinion that until 1963 there would not be sufficient evidence available to obtain an assessment of free market house rentals.
Now there is not even such a sensible reason as that. We learn from the Minister that there is to be such a shortage of valuers, solely because of the needs of the Land Commission that revaluation has to wait. Such is the effect of Government legislation on an already overloaded branch of the Treasury. It is an appalling state of affairs that first things cannot come first, but must be sacrificed for a piece of doctrinaire legislation.
The trouble will come when rateable values soar again, as they did before. Moreover, the Government are postponing yet again the rationalisation of


valuation procedure. It is well known that ratepayers feel that valuation procedure needs some rethinking, especially on the problem of property revaluation for rating purposes. This is long overdue. There is no proper distinction between purpose-built flats and flats in converted houses. There is much hard feeling about the fact that a flat or a bungalow is customarily valued proportionately higher than a two-storeyed semi-detached house. There are many other anomalies of a similar nature.
My final point concerns the vexed question in Part III of the Bill of the double burden which non-county boroughs are called upon to bear in connection with unclassified roads. Although county councils will receive a needs element grant, the non-county boroughs and the urban districts will continue to have to pay 100 per cent. of the cost of maintaining not only their own unclassified roads, but also to share the burden of the unclassified roads in rural districts, and this in spite of the fact that any really impoverished rural district will qualify for the rate support clement of the grant.
I draw the Minister's attention to the present unsatisfactory position. The basic problem arises from the fact that non-county boroughs and urban districts with a population of 20,000 or more usually maintain their own unclassified roads. In the example of Poole, this amounts to a 10d. rate. In addition to this, however, Poole also pays the Dorset county precept another 51d. towards the maintenance of unclassified roads in the rural districts of Dorset. This is about 38 per cent. of the county's total expenditure on this subject.
What with this, and in certain other ways in which Poole subsidises rural areas, in 1965–66 the rate in Poole amounted to lls. and the average rate per domestic hereditament was £55 6s., while in two neighbouring rural districts the corresponding figures were respectively a 10s. 2d. rate and a 9s. 7d. rate and an average rate per domestic hereditament of £41 16s. and only £29.
Whatever may have been the position in the past. I consider that the proposed grant changes will once again have the most unjust results with unclassified roads. I ask the Minister to look again at

this aspect of the Bill. Surely it is wrong that the unfortunate ratepayers of the non-county boroughs and urban districts should have this levy made upon them when the county councils will be receiving Government grant and when rural authorities, aided by rate support grants, should quite reasonably be expected to meet the costs themselves.
Those are the most important comments which I wish to make and I hope that we shall receive some encouragement from the Treasury Bench.

7.57 p.m.

Mr. Ronald Bell: Rating and local government finance are not only complicated subjects but are also regarded as very dull subjects. I fear that that has been reflected by the number of hon. Members present during the course of the debate. Whatever its inadequacies—and they are substantial—this is an important Bill which will affect very many people during the next few years, and it is therefore a matter of regret that so few hon. Members, not including the Parliamentary Secretary apparently, should be interested. The Parliamentary Secretary does not seem to be interested at the moment. However, we have conducted the debate for a considerable time without the presence of any Minister from the Ministry of Housing and Local Government, which seems to be highly regrettable in the circumstances.
The mirage of local government reform as a solution to the problems of local government finance—I do not know whether I could have the Parliamentary Secretary's attention for a moment I appreciate that he has other subjects to talk about.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Robert Mellish): I was only saying that the hon. and learned Gentleman is being so dull in any case.

Mr. Bell: The hon. Gentleman should realise that I have hardly had the opportunity to be dull yet. In any case, I remind him that this is by no means the first occasion in the debate on which hon. Members have had to complain about conversations on the Treasury Bench while they were speaking.
I was saying that ever since before 1956 we have had this preoccupation with the reform of the structure of local government as a solution to the problems of local government finance. We had the White Paper of 1956 on local government reform and then the Local Government Act of 1958 which established the Local Government Commission to reform the structure of local government. Then, some weeks ago, just before the General Election, the Minister of Housing and Local Government announced the dissolution of that Commission and the setting up in its place of the Royal Commission. Today the right hon. Gentleman the Minister of Housing and Local Government described this Bill as a holding operation for, perhaps, three years until the report of the Royal Commission.
He used the phrase which I have found to be fairly common both in his own speeches and in the Command Papers which have been issued for his Department for the years—the phrase "a really radical reform of local government". He invited the House to accept this Bill as a holding Measure pending a really radical reform of local government finance which was likely to result from the Report of the Royal Commission.
I believe this to be a mirage. I do not believe that the Royal Commission will succeed, at the end of two years, in producing a really radical change in the structure of local government. There are problems inherent in the structure of local government which were plainly present in the minds of those who drafted the White Paper of 1956 and which one can sense again in the debates which took place on the Local Government Bill of 1958. These are problems of size, or of identification of the individual ratepayer with the unit of local government with which it is desired that he should take an interest, which cut across the desire of the Conservative Government of the time and the present Government to develop large units of local government in the interests of relating the resources to functions—a very laudable objective.
Today, the Minister said that, in his view, the really radical reshaping of local government finance must be preceded by a really radical reshaping of the structure of local government. If that is so, then it would appear that the intervention by

the Joint Parliamentary Secretary in the speech of my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) should be taken only at its face value. My right hon. and learned Friend was drawing attention to the fact that the terms of reference for the Royal Commission do not refer to the finance of local government. The Parliamentary Secretary intervened to say that they were not expressly excluded, which is true. One notices that in another place on 28th April last the noble Lord, Lord Kennet, who is another Joint Parliamentary Secretary to the Ministry of Housing and Local Government, said:
We are not looking beyond three years, because it is more than possible that by that time the Royal Commission will have reported on the entire question of rates and the fabric of local government, taken together."—[OFFICIAL REPORT, House of Lords, 28th April, 1966; Vol 274, c. 249.]
There the noble Lord was certainly implying that the Royal Commission would examine local government finance and the structure of local government together and report upon both. That is not consistent with what the Minister said today, that the reforming of the structure of local government must precede the financial changes, nor, if what the noble Lord said was really intended, can one imagine that all mention of finance would have been left out of the terms of reference of the Royal Commission. That being so, I find it difficult to accept this Bill as a stopgap, as something to deal with the situation for the next two or three years.
Because of that in particular, although there are other reasons, I find it especially regrettable that the Bill proposes to defer the next revaluation which ought to take place in 1968. The Minister said today what he had said before, that one of the defects of rates was a lack of buoyancy. The same phrase appears in the White Paper, when it is said:
…rates lack natural buoyancy; …rating assessments do not adjust themselves to rising values.
They do every five years under the provisions of the Rating and Valuation Act, 1925, but they do not if one suspends one quinquennial revaluation. The whole trouble from which we suffered when the last revaluation took place in 1963 was that it was the first revaluation for some


15 years. The changes were so great that they caused general indignation and upset.
If we are to avoid the 1968 revaluation and move on to the 1973 revaluation, then we are going to have a ten-year interval in revaluation. The 1963 revaluation was based upon valuations made during the years 1961–62. Thus very great distortions will have taken place in that period, wholly notwithstanding the provision in this Bill for Amendments according to the tone of the list. Because the reason for postponing the quinquennial revaluation is the shortage of valuers to carry out the 1968 valuation, for the same reason, that they are not available to carry out the quinquennial revaluation, they will not be available to adjust the existing lists according to the changes in the value of property. Therefore, we shall have a ten-year distortion, and it is this sort of thing which has given the rating system a bad name.
I am not going to take up time in defending the rating system. It is possible to say a great deal more in its favour than one has heard in this debate, and I thought that the right hon. Gentleman the Minister was very fair about this in his speech today and in the April White Paper when he indicated that there were some strong advantages in using the net annual value of properties as the basis of raising local revenue. I merely mention this in passing, but we should all beware of condemning the rating system for no better reason than that it was introduced approximately 365 years ago. One hon. Gentleman opposite seemed to think that it had not been altered in the intervening 365 years. That is far from being the case.
This Bill is just tinkering with rates. What is wrong is not so much the rating system as the rate of growth in the burden of rates. The 27 years which have elapsed between 1936 and 1963, with the war in between, and the rapid growth in local government expenditure have gravely discredited the rating system and produced the problem with which we are trying to deal today. The figures are given in various places. Local government expenditure has increased by 2½ times in the last ten years. The cost per head of local government expenditure has doubled in 10 years. This is a phenomenal rate of growth, and I do not think it is true, as the Minister said today, that the only significant reductions which can be made

are by cutting services or transferring them from the rates to the Exchequer. I believe that quite substantial economies could be made if the connection between expenditure and the rate charge were less blurred.
I have been a Member of the House continuously for 16 years. In that period, I do not think that I have had more than two or three letters from constituents suggesting any specific economy in expenditure. I have had innumerable letters suggesting increases in expenditure. Of course, when the rate demand comes along there are plenty of letters complaining about the burden of rates and the general level of local authority expenditure. All the pressures on councillors as well as on Members of Parliament from the public are for increased expenditure, never for reduced expenditure.
In rates, the reason for that is not very hard to find. Three-quarters of local expenditure is paid for by central Government grant and by rating places of work. Only a quarter of local authority expenditure is raised by rating places of living—domestic rating. Therefore, the connection between spending some more money on this, that and the other is so blurred that it does not connect up in the mind of the local government elector. That is one reason which I had in mind when at the beginning of my speech I said that there are very great problems facing anybody who tries radically to reform the structure of local government, with the finances in mind.
Suppose that we go in for regionalism. That means very much bigger units—I suppose three or four counties. By that time the unit is so big that expenditure in any place will be lost in a wide fund, and nobody will care very much. That is the trouble. Alternatively, if we try to solve the problem by enhancing the powers of the local authorities rather on the Greater London basis, we shall have destroyed the regional proposal, because the real power is in the rating authority and not in the precepting authority. Hon. Members on both sides of the House have criticised the Bill for not transferring enough to central funds. In a way, I will do that myself later. But the more we do that, the more we destroy the responsible element in representative local government.
The difficulty about rates as I see it—and I have spent a fair amount of time in dealing with rating matters—is that the distribution of the burden on some classes of the community is awkward. Old people are the real problem. Hon. Members on both sides have tried to deal with that to some extent. More could be done. I would prefer to see more done in that respect rather than looking for pie in the sky in the form of local income tax or sales tax, or anything of that kind.
The other element of rating which I do not like is that it taxes improvements in a man's house. Suppose that he gets busy and devotes his attention to making a beautiful garden. He may succeed in doing that and it will not increase his rate burden because, to put it very simply, valuers do not count gardens; they reckon that they do not affect the rent which a hypothetical tenant would pay. If, on the other hand, he spends his time putting down a wood block floor, his rating assessment goes up as automatically as night follows day. For one room it puts his assessment up by £4. It probably means that he pays £2 a year for the rest of his time in the house for a block floor which he put down. The fact that every time a person improves his house he pays a tax is one of the defects of rates.
Since I do not see any radical change being made and as I think that this is an illusion, I am driven to a conclusion which I do not like, which is that the defects of the rating system are tolerable provided that the amount of rates is not too high. To achieve that, we have to shift more of the burden to the Exchequer, although for other reasons I regret it. I will not suggest specific services, but I think that it is possible to pick out some services which avoid the inconvenience mentioned in the White Paper, which is that it is bad to have services paid for centrally and controlled locally. It is much better that the control and the duty of raising the money should be in the same hands. I think that the remuneration of teachers is a very good example of local authorities not having effective control. There is no reason, in my view, why the whole of that responsibility should not be put on the national Exchequer. I believe that it could be done without any disadvantage to the vitality of local government.
There are other suggestions which I could make in that respect. My broad point is that, in spite of all the disadvantages, the only practicable solution is to put more of the burden on the central Exchequer. I would carry that quite a long way because we have gone too far in rating industry and shops. The amount of rates which we raise by taxing places of work is excessive and blunts the responsibility of the ratepayer when he goes to the polls.
I want to make a local point very shortly because it has been made already. I represent South Buckinghamshire, the part of Bucks nearest to the Metropolitan area which most feels the cost effect of the Metropolitan area. This is something which should be considered in Committee.
The general effect on counties has also been mentioned. Again I wish to say only one sentence on that matter. I think that the counties are being shortchanged on the highway proposals because the specific grant will be cut down and the maintenance of all roads, including Class I roads and the improvement of Class II and Class III roads, will still fall on county rates. I cannot imagine that it will be covered in the support grant.
The third fault which the Minister found with rates was their utter lack of intelligibility. With respect to him, I do not think that this is really a fair criticism of them. He described the Bill as softening and blunting, but what the result will be when one softens and blunts utter lack of intelligibility, I am not quite sure. I feel that it will be much worse than what we start with. Rates are horribly complex but Governments rather than the system make these complexities.
I mentioned water works while the Minister was speaking, with a certain nostalgia, because it is fantastically complicated and because I had some practice in the rating law. I moved a series of Amendments to the assessment of water works during consideration of the Rating and Valuation Bill, 1961, and there was one day on the Committee stage when I fully understood the rating of water works—though I have never done so since. It is just one little peak of


achievement that I fully grasped the incredible complexities of that system.
I agree that there should be changes in some of the principles according to which properties are valued, but, with all respect to the Minister, I do not think this is important, although he made it one of his three main points. Does it really matter if there is not a general appreciation by Mr. Smith of why his house is rated more highly than an identical one along the road? He can go to a tribunal. I do not suppose that anybody understands the rating of water works, except in flashes of inspiration, when somebody has to be paid to understand it. But it does not matter. You fix it for three years and then there you are.
It is not a difficult principle that a house is valued on what a hypothetical tenant would pay to live in it, and I doubt if one would find a simpler principle. I am against the adoption of a capital value basis, which would lead to greater complication and cannot be done, because if we have not got the valuers to carry out the 1968 valuation how can we have the valuers to carry out the total revaluation of the whole country on a capital value basis?
I am disappointed with the Bill in a way, because I should like to see a much greater degree of relief for those sections of the taxpayers who feel the rub of the green under the present system, that is to say, the old people. parents whose children have gone away but who still like to keep on their house to which the children can return at holidays and weekends, and so on. They are at present taxed for a local basis on the size of their house.
This made sense in 1601 and for long after that when there was only one rate, the Poor Rate. It was then not unreasonable that one should contribute to the relief of the poor according to the size of one's house. Now there are many rates, and most of them are in the nature of payments for services. It is ridiculous, if one looks at it dispassionately, that a person should pay twice as much rates because he has a larger house and ten times as much rates because he has a shop in the High Street rather than in a side street. This has ceased to bear any relation to payment for services.
The Minister's first point was that rates were regressive. They are not. They

are too progressive. They are highly progressive, and the trouble is that they are progressive in a very eccentric manner. I should like the progressive element in rates to be toned down for those whom it hits savagely, and to see mitigation of the effect of rates on those sections of the community which are hurt by them at present.
I ask the right hon. Gentleman and his colleague not to think of this as a holding operation for two or three years. We shall be rated in this way for 10 or 20 years to come, without any question, and it is time that we got down to the problem of finding a system which is equitable and provides finance for local government.

8.26 p.m.

Mr. James Allason: The principal points which we have to discuss are the overall size of the Exchequer grant and the fairness of its distribution. It is very difficult to discuss the fairness of the distribution if we do not know what the formulae for the factors for the distribution shall be. At least we know what the factors are to be, and we know the factors which are not there.
I wish to deal, first, with two factors which are not there. There is a factor for a reducing population, but a factor for the expanding population does not exist, although the Minister is well aware of the need for it. He knows that there are very high debt charges, and in Hertfordshire, for example, the debt charges are twice the national average. The reason is that it is necessary to provide facilities well ahead of the increase in rateable value, which is ultimately achieved by the expansion of the population.
When it was decided not to include this factor in the 1958 Act the reason given was that it was thought that experience would prove that the expansion of the rate capacity would follow so quickly that it would not be necessary to meet this factor. The experience of Hertfordshire and other counties with expanding populations has been exactly the opposite.
Since 1959 the loss has gradually increased until now it is £1,700,000 a year. That loss is the difference between what Hertfordshire gets. or fails to get, because


it has an expanding population, as compared to the average. That is the element of loss over those years, and this will continue. By 1967–68 it is estimated that the loss will be £2 million, i.e. if no action is taken now there will be a further loss of £300,000 a year to Hertfordshire. The total loss as a result of this is the product of a 10d. rate.
Another factor which is missing is where there is a high average rateable value. It sounds a very satisfactory thing to have an area with high rateable values, but, as my hon. Friend the Member for Poole (Mr. Murton) said, it can work out expensive. For example, in St. Albans the average payment per domestic hereditament is £53 15s. 6d. In Todmorden, the corresponding figure is £13 4s. ld. A possible reason for this is that Todmorden receives a rate deficiency grant. There was a possibility of a factor being included, but it was left out. There is a corresponding factor for London, but there is nothing for the rest of the country.
We need more information about factors which are included. I asked the Minister about education earlier. He said that all education fell within the needs element. Of course it does. I was not asking that. I was asking about the split between the basic payment and the supplementary payment.
Schedule I deals with the needs element. There are two factors. The basic element is the factor for the numbers of the population under the age of 15. The supplementary element which is what the Minister spent his time talking about is the excess of education units to population. There is a rumour that the basis element is to be two-thirds of the total sum and that the excess of education units per head of population element is to be only one-third.
There is a wide variation in education costs. My right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) gave figures for 1966–67. I want to give actual figures for 1964–65. In Hertfordshire, the costs were £26 12s. per head of the population. In East Sussex, the figure was £18 10s. In Eastbourne, the figure was £15 9s. This is not to say that Eastbourne is being mean in its expenditure on education. It is only that its needs are less because it has a fairly high age group, whereas Hertfordshire

has an expanding population, a young population and great educational needs.
Therefore, we are paying very highly for it. If two-thirds of the total sum is to go on the basic element and only one-third on the supplementary element, counties which pay highly for their education per head of the population will suffer badly. I should like to know whether it is intended that the split-up is to be two-thirds and one-third.
Figures are available for roads. I complained that nothing has been stated. The formulae are not yet decided. The figure quoted by the Ministry of Transport for Hertfordshire entails a net loss to the county of £134,000 a year. This is explicable if all secondary roads in the county are considered to be principal roads. I understood from what the Minister said this afternoon that principal roads are to be Class I roads plus a very few extra roads.
I should like a firm undertaking that the Ministry of Transport, if it has provided that secondary roads in Hertfordshire should count as principal roads, will not change its mind later simply because of what the Minister said today or for any other reason. Hertfordshire, being so close to London, has to provide roads of a very high standard. Many of the first-class roads in the county are dual-carriageway and twin-track.
My hon. Friend the Member for Aylesbury (Sir S. Summers) suggested that it might be possible not only to take the factor of road mileage, but also to take account of use. I would suggest that one might take into account as well the width of the road, because that is usually related closely to the volume of traffic which it carries. The greater the volume of traffic, the wider the road that the local authority is forced to provide. Consequently, it might be useful to consider the width of the road, because there is a wide variety of different maintenance costs. In Surrey, for example, the cost of a Class I road is £2,639 a mile, whereas in Devon it is £619 a mile. It is obviously necessary to produce some factor other than the distance.
Turning to the domestic element in the grant, those counties with severe problems of huge increases in rates in the past, in the present and in the future are worried about the reduction of rates by


the fixed sum of 5d. There may be some areas in the country, though I rather doubt it, where rates will not rise by as much as 5d. If they rise by 6d., the domestic ratepayers will find their rates going up by only ld., whereas in places like Hertfordshire, where the customary rise in rates is about ls. 6d., a 5d. reduction will not be very helpful.
It is difficult to forecast what the effect will be in the future, because the Ministry is giving out figures suggesting that future rate increases will be about 10 per cent., whereas they have been considerably more in the past, if we apply the difference between the year before last and last year, we get some fairly interesting figures. In 1964–65, domestic ratepayers paid £468 million. In 1965–66, they paid £533 million. Those are the actual sums of money collected from domestic ratepayers, and it is clear that in that period there was an increase of 14 per cent. If one knocks off the £25 million which, as I calculate it, represents the 5d. rate, one finds that instead of art increase of 14 per cent., one gets an increase of 9 per cent.
That is an increase which is still totally unacceptable, and it does not marry up with what is said in paragraph 15 of the White Paper, that the aim would be to keep the average increase in rate pound-ages more nearly in line with the growth of the economy, as measured by gross domestic product. I suggest that if the element in the domestic product is to be held at around £25 million, that is totally inadequate in view of the way rates are going up at the moment.
A number of hon. Members have recalled the Labour Government's pledge that they would reduce rates. The 1964 election manifesto spoke of early relief for ratepayers by transferring a greater proportion of the expenditure to the Exchequer. However, these proposals are totally inadequate. They do not fulfil that pledge. They are a shabby betrayal of promises which were made and which were accepted by people in good faith. I condemn the cynicism and complacency of the Government in the face of the severe problem of ever-increasing rates, and I call on them to think of something very much better in order to fulfil their election pledges.

8.40 p.m.

Mr. Stan Newens: It ill becomes the Opposition to attack the Bill in the terms which some hon. Members have employed. It is strange that the hon. Member for Hemel Hempstead (Mr. Allason) should refer to the Bill as a shabby betrayal when we reflect on the amount that the Conservative Government did to tackle this very important problem. It is one which has not arisen in the last couple of years. It has been with us for a long time.
Not only did the Conservative Government do practically nothing to improve the situation; they did a great deal to make things worse. I refer in particular to what was done at the time of the London Government Reorganisation Bill.
In the case of my own constituents in Chingford, who were brought into the Greater London area, rates went up very considerably, and that is true right the way round the outer Metropolitan ring. Ratepayers suffered very considerably as a direct result of the policy of the Conservative Government. It is true that a miserable relief Act was passed by them, but it helped practically no one except one or two boroughs on the South Coast.

Mr. Ridsdale: Did not the previous Government set up the Allen Committee whose Report is the basis of all the present proposals?

Mr. Newens: It may be true that they did that, but they took no action during the time that they were in office to deal with this important problem in any effective way.
Having said that and having welcomed the Bill in general terms, I want to say, none the less, that I find it a disappointment, to some extent. When the Labour Party was in opposition, it fought the block grant proposals very hard. At that time, many of us argued the virtues of the specific grant system, which tended to encourage local authorities to spend more on worthwhile services. The Bill, unfortunately, does not do many of the things which the specific grant arrangements previously did. In fact, it perpetuates and preserves many of the faults to which many of us objected in the Conservative proposals. In these respects, I feel that the Bill is not radical enough.
My right hon. Friend the Minister, in introducing the Second Reading of the


Bill, pointed out that it has many merits. It will, of course, do something towards shifting the increasing burden on the rates from the local authority to the central Government, and it will give aid to domestic ratepayers. This is very good indeed, but it is not enough. Certainly in the London area, particularly in the outer Metropolitan fringe, the burden of rates has reached such astronomical proportions that something more is called for in the very near future. A rate burden of the proportions which has been reached in these areas is acting as a tremendous deterrent to progressive authorities. I must make a forceful plea to my right hon. Friend to consider the plight in which many authorities in the London area are placed. They need more help than is provided by the Bill.
Despite the fact that we provide in the Bill for four new specific grants, I want to express alarm that we have decided to discontinue the provision of specific grants for school milk and school meals. I cannot help saying that I regard this as a retrograde step. It is very regrettable that the initial attack upon this vital service should have been made by a Labour Government.
I hope that my hon. Friend the Joint Parliamentary Secretary, when he replies to the debate, will say what safeguards the Government envisage to prevent local authorities economising in these services and what safeguards are envisaged to prevent local authorities from reintroducing charges or increasing existing charges. The benefits which have accrued to the community as a whole from the meals and milk service in the schools are not easy to measure, but I know as a teacher that many schoolchildren do not normally have the right diet.
There is a great tendency for the children who most need school meals and milk to go out during the day at the secondary stage and merely have chips or something like that which will not give them the sort of benefit which a school meal is designed to do. It is precisely the sort of children about whom we are most concerned and who most need school meals who are likely to be deterred from partaking of these services if they deteriorate as a result of this step. I hope for this reason that my hon. Friend will give us some assurances about this.
One other issue that I would like to mention in connection with the Bill and which gives me cause for alarm is the question of teachers' salaries. The need for the payment of teachers' salaries to be transferred to the Exchequer is very necessary. We must recognise in the community as a whole that there is great need to pay teachers properly. The rates which teachers are at present paid are certainly not high enough. The ever-increasing rates are a great deterrent which affects local authorities in their attitude towards increases in teachers' salaries. We must seek to do something soon to implement the pledge which Labour made in this respect during the last two election campaigns.
To sum up, I feel that although the Bill does something which we should applaud and welcome, it does not go far enough. I support the Bill accordingly as a development in the right direction, but I hope very much that my right hon. and hon. Friends will work hard to see that something is done to go considerably further than the Bill. More than this, I hope that in Committee they will be prepared to consider Amendments, particularly concerning the school meals and school milk service.
We all know that there is great pressure wherever financial questions are mentioned. We all know of the great need which is continually pressed upon us to restrict rather than encourage local government expenditure. We must, however, face the fact that we shall not get the quality of local service that we desire, we shall not get fair treatment for the domestic ratepayer and we shall not be able to encourage progressive local authorities until we get far more far reaching reforms than are envisaged in the Bill. I therefore appeal to the Government to press ahead with their full review of the rating system and with the job that the Conservatives did not do, a job which must be done in the interests of the community as a whole.
I repeat what I said earlier, that I think it ill becomes the Opposition today to attack the Bill in the way that they have done, because it goes quite a way towards doing some of the things which ought to be done. But, at the same time, I think we should face the facts clearly and recognise that until far-reaching changes which are not at present proposed are


carried out, we shall not have the local services that we all require to meet the needs of the country as a whole.

8.50 p.m.

Mr. John Nott: A few weeks ago in this House we debated the provision of local authority capital finance through the Public Works Loans Board and the open market, and tonight we are concerned with the revenue side of local authority finance, namely, grants, rates and miscellaneous income. Fortunately, the amount of locally-collected revenue of local authorities still far exceeds the amount of revenue which comes from the central Government. In 1963, about £1,700 million of local authority revenue came from locally-collected sources, and only £1,000 million from central block grants.
I mention this at the start of what I want to say because I think that it is vital for the independence of local government—it was referred to by my hon. Friend the Member for Devizes (Mr. Charles Morrison)—that in discussing the whole question of the rate-grant relationship in local government we do not overlook the fact that through local government finance runs the important theme of the independence of local government.
In the Bill the Government have propped up—I use their own words from the White Paper—the present system by introducing the needs element which closely resembles the old general grant. They have produced the resources element, which is almost exactly similar to the old rate deficiency grant, and the only new thing which they are proposing at all is the domestic element. We have no details of how this will work, and, therefore, to my mind tonight we are largely debating this whole Bill in something of a vacuum.
It is true that the needs element has been slightly refined this is very good, and we are not complaining about it—and the resources element has been stabilised instead of being adjustable, but I repeat that it is only the domestic element which is new, and, as I say, we know very little about it. It seems hardly worth while having presented the Bill at all—I shall come to the domestic element in a moment—when it is likely

to throw up more anomalies and more problems than it will clear up.
Let me quickly run over a few of the obvious anomalies which exist. First, the whole basis of calculating the new aggregate amount of grant seems to be quite impracticable in the time allowed. The 1,350 county district councils in the country are saying that they simply cannot produce the estimates in time for this Measure to come into effect in April, 1967. This is reminiscent of the Minister's introduction of the option scheme, which the building societies described as unworkable almost as soon as it was announced.
Again, there is general confusion about the domestic rate aid grant which has been called "drag" by a number of local authority treasurers. There are also a whole host of questions to be answered about the factors in the needs element, and how they will affect different authorities one from another.
I think that when presenting the Bill for its Second Reading the Minister was under an obligation to give further details of how these factors would be calculated. Under the old system there were wide discrepancies indeed, and perhaps I might quote two examples. Merthyr Tydvil had 74 per cent. of its income in grant, and 26 per cent. in rates. Oxford, on the other hand, had 34 per cent. in grants and 66 per cent. in rates. If these relationships are to be completely changed as a result of the Bill, at least the House should have been told, or some estimate produced, so that we could have studied the matter very carefully.
I believe that the change to education units, the changes in highways and also the low density factor will help my own County of Cornwall and the Isles of Scilly, about which I am most concerned. However, it will certainly not help a host of counties throughout the country. Many will be worse off as a result of the Bill. It is surely wrong for the Government to say that this will relieve the burden of rates if a large number of ratepayers is worse and not better off as a result.
The Minister described several liabilities which surround the rating system. I want to name three, which are similar


to his. First, the rating system is criticised for its regressiveness. Secondly, it has been criticised—in perhaps slightly more sophisticated terms than the Minister used—for its overall incapacity to bear the strain of increasing local government expenditure. Thirdly, the rating system has been criticised for the disparity of contribution between one local authority and another. I do not believe that the Bill will get to the roots of any of these problems.
First of all, on the question of regressiveness, the Rating Act has done something for the 2 million ratepayers living in poverty, but it has done nothing for those who suffer considerable hardship from the rating system as a result of their living in hardship on fixed incomes. These are the people who have been seriously affected. Secondly, there are those living just above National Assistance Board levels. They will not be helped by the Rating Act. Third, there are those who are too proud to get help from the National Assistance Board. These are the new poor of the 1960s. I cannot see that they will be helped by either of the two bites which the Government have had. These are the very people who will suffer most from the Selective Employment Tax if it goes through. They have suffered most from the attack on savings in the 1965 Finance Bill and are suffering most from inflation, which is now running at 5 per cent. a year.
The second aspect is the overall incapacity of the rating system to bear the strain. I believe that the Civil Estimates show that the social services will grow by about 14 per cent. in 1966–67 and local government will bear a large proportion of that growth. The rates have been increasing by 10 per cent. a year. The £30 million grant, starting in 1967–68, the "drag" element, the domestic element, will only cut in half that increase of 10 per cent. I believe that the increase in social services envisaged in the Civil Estimates indicates that rates will grow by more than 10 per cent. over the coming years. Therefore, this domestic element will not halve the increase in rates but have a much slighter effect.
On disparity of contribution, the domestic element does very little to try

to balance up the amount which one local authority pays with that paid by another. In the journal "Local Government Finance", there was a very interesting comparison of how this domestic element would affect two different local authorities. It took Torrington, in Devon, as the first. There, the average rates paid per household are £14. In five years' time, assuming that rates continue to rise at 10 per cent. a year, it will be £22. However, if one takes the domestic element into account, that £22 will come down to £19.
Then consider, at the other end of the scale, Eton. Here the householders are paying £66 in rates. In five years' time they will be paying £100 and the domestic element will bring it down to £87. Thus, the disparity between one local authority and another is hardly affected.
I am delighted to know that the Minister is looking at the question of the nationalised industries. The local authorities on the working party which has been considering this matter have produced a suggestion to the effect that certain nationalised industries should be paying up to £240 million a year in rates as opposed to the £60 million which they seem to have been contributing in the past. If the nationalised industries could be made to pay their proper contribution, the additional sum would shift a large amount of the burden from local ratepayers to central taxes.
I do not believe that the Bill will tackle the objects set out in the White Paper. It certainly does not meet the promises which the Government opposite made in their 1964 General Election manifesto, in which they said that they would give early relief to ratepayers throughout the country.

9.1 p.m.

Mr. John M. Temple: The most apt description of the Bill came from the hon. Member for Epping (Mr. Newens), who described it as a disappointing Measure. He took the words out of my mouth. Anybody who is interested in local government finance or ratepayers will thoroughly agree with the hon. Gentleman's description of the Measure.

Mr. Newens: Does the hon. Gentleman agree with my other remarks, particularly


my references to the record of the party opposite?

Mr. Temple: I will deal with that later. I noted the hon. Gentleman's description of the Bill and, as I said, he took the words out of my mouth.
The enthusiasm of hon. Gentlemen opposite has been typified by the paucity of speakers from among them and the scant interest they have shown in the debate. At one time, for a considerable period, only one hon. Gentleman was on the back benches opposite listening to our discussing a matter which I regard as being of prime importance for the whole administration of local government finance.
I will take up during the course of my speech some of the interesting points which have been made, particularly by my hon. and right hon. Friends. I agree with the Minister about the complexities of local government finance and I share his respect for those complexities. I look forward to tomorrow, when we will be discussing the Finance Bill. Compared with the complexities of local government finance, the finances of the country are run on a much more comprehensible basis. I forecast that this Local Government Bill will add to the complexities of local government finance and that it will prove a positive minefield of complexities. I anticipate a rather complicated Committee stage, because the Measure bristles with difficulties.
My hon. Friend the Member for St. Eves (Mr. Nott) pointed out that we were debating the Bill in a vacuum; he was right. It would be easier if, when speaking, there was not a continuous conversation going on between the right hon. Gentleman the Minister and his hon. Friend the Parliamentary Secretary, because I was about to say that the right hon. Gentleman is undoubtedly offering the House and the country a complete pig in a poke. The Bill has been introduced with no proper Explanatory Memorandum. When we introduced the principal legislation, the 1958 Act, it was preceded by a White Paper which quantified the factors on which the general grant would be determined. None of those factors have been specified by the Government in their White Paper.
At the request of the then Labour Opposition, the then Minister of Housing

and Local Government provided a table of exemplification as to exactly the effect of the proposed legislation on all local authorities throughout the country. That gave local treasurers and ratepayers an opportunity to see objectively what the effect would be in their own areas, and it gave Parliament, in our Standing Committee, a proper chance to discuss the real merits or otherwise of the proposals.
It is significant after all that the Labour Party has said about specific and percentage grants, that right hon. and hon. Members opposite have had a conversion to the principle of the general grant. I do not know quite when that conversion took place, but it must have been one of those recent but welcome conversions to Conservative policies which we see coming over the Labour Party all the time. It is quite wrong to describe this as a Local Government Bill devoted primarily to finance. It has so many miscellaneous provisions that it should be a Miscellaneous Provisions Bill.
Turning to the question of the more extensive type of general grant, I wonder whether the Minister read my letter to The Times of 9th June. It was directed primarily to him. I asked in that letter that we should have put before us at an early date an exemplification of the effect of his Bill. If he has not read it, I draw that letter to his attention, hoping that we shall have action along those lines before we reach the Committee stage.
Everyone is united, outside the Front Bench opposite apparently, in condemning the postponement of revaluation. The Minister is no lover of the rating system, but he has gone a great way to damning it by postponing revaluation and thereby not giving the rating system a chance to work properly.
Another matter which could have been left out of the Bill is the reorganisation of street lighting provisions. In the Minister's own words, this is a temporary Measure and it is his expectation that we shall shortly have a redrawing of boundaries as a result of the Royal Commission's recommendations. That would have been time enough to deal with this complex transfer.
I come now to the background to the Bill. The Labour Party manifesto of 1964 was extraordinarily forthcoming about the relief for ratepayers which Labour would give if returned to office. It said specifically:
Labour will restore the percentage grant and transfer the larger part of the cost of teachers' salaries from the rates to the Exchequer.
We all know that, in the intervening period, very little was done and, when the 1966 election came along, the Labour Party manifesto then dealt with the matter in small print. There was little reference to it by Labour speakers during the campaign, and I am not surprised. They wanted the impression to remain that they were still going forward with their 1964 proposals although they had been whittled down. All we heard then was that there would be relief for hard-hit families. This has been given, but it was done largely at the expense of other ratepayers. [HON. MEMBERS: "No."] Yes, very largely it was. I know about the 25 per cent., but a very large element was back-loaded on to all other ratepayers.

Mr. Crossman: We are comparing rates here. Will the hon. Gentleman consider the Tory rate relief Measure introduced before the previous election? What proportion was provided for there in the grant as between ratepayer and tapayer?

Mr. Temple: I do not know that exactly.

Mr. Crossman: I do.

Mr. Temple: But that was always called an interim Measure, and it was brought in at a time when a complete review of local government finance was going on.

Mr. Crossman: Ours, also, is an interim Measure, as I made clear. Why not admit that the hon. Gentleman's Government did the same thing?

Mr. Temple: If the right hon. Gentleman is now talking about this Bill as another interim Measure, he must remember that it is to go on for five or six years. This was never the intention of the Tory Party. Ours was just an interim Measure to carry us forward for a very short time indeed.
The short answer as to why Labour's enthusiasm for relief to ratepayers evaporated between 1964 and 1966 was that the opinion polls at that time indicated that the Labour Party would be returned with a large majority. Enthusiasm among right hon. and hon. Members opposite for the relief of ratepayers dried up. As a result, we now have this very disappointing Bill presented to the House.
The 1966 White Paper showed a tremendous turn-about, or climb-down, in the Labour Party's attitude to local government finance. We are extremely glad that the Labour Party has returned to a certain amount of Conservative financial sanity. The Government have now introduced what is, in effect, a very much more extensive general grant. I congratulate them on it. It is a Conservative policy which they have extended, and we look forward to working in Committee to improve this general or rate-support grant which they have now proposed.
However, having been a member, like my right hon. and learned Friend the Member for Hexham (Mr. Rippon) and the hon. Member for Widnes (Mr. MacColl), of the Standing Committee on the 1957 Bill, I am surprised, after the criticism levelled at us at that time, that right hon. and hon. Members opposite have made this turn-about, departing entirely from the percentage grant which they so glibly promised to bring in if returned to office.
Looking for a moment at wider questions, I am greatly concerned about the total current expenditure of local authorities in general. It is rising at the cumulative rate of 9 or 10 per cent. per annum. I took some figures from Cmnd. 2966 of April, 1966, and found that the total amount of current local authority expenditure had risen by £1,000 million between 1960 and 1965. The sum of £1,000 million in five years is a very large increase indeed. It means that local authority expenditure during those five years has galloped past the total of defence expenditure. I would have thought that this was one of the matters which has been very much the concern of the central bankers who have been meeting in Basle recently. Frankly, I have been a little disappointed at the small attendance, certainly on the Government side, during the


discussions of the Bill which deals with the whole problem of the finance of local government.
I make one small quotation from paragraph 17 of the White Paper dealing with the relief to ratepayers proposed by the Government. It says:
…the increases in rates which householders are called on to bear in 1967–68 and subsequent years will be only about one-half of what it otherwise would have been.
That is perfectly clear and plain English, but it does not mean what it says. The action of the Bill will not be to halve the increase in rate poundage which will occur in every local authority throughout the country. I shall go on in a few moments to show that the incidence of expenditure and the incidence of rates among local authorities throughout the country will be most uneven and that the effect of the Bill will by no means be to halve the increase in rate poundage among all authorities.

Mr. Crossman: I did not say that.

Mr. Temple: The White Paper says that and it was acknowledged to read clearly.
One of the effects of the Rating Act, 1966—I disagreed with the Minister a few moments ago and said "major share when I should have said" quarter share "—was to back-load about £9 million a year on to the domestic sector.

Mr. Crossman: Mr. Crossman indicated dissent.

Mr. Temple: I am quoting from the County Council Gazette of 1966, which says that in 1966 the back-loading on the domestic sector would be £9 million a year. The built-in increase in local government expenditure will increase this in 1967 to about £10 million a year and half of this will be in the domestic sector. Therefore, as the Minister proposes that the actual increase in grant in the domestic sector through the new domestic element will be £30 million less the £5 million increase which I have just mentioned. The benefit to the domestic sector in the forthcoming years will clearly be less by £5 million than stated. In other words, it will be £25 million rather than £30 million and will be whittled away further by the recasting of the highways grants mentioned by the right hon. Gentleman.
The Bill is not as generous to ratepayers as the Minister makes out. I am now scanning the Government Front Bench to see whether any Treasury Minister is present. I see that there is not and there has not been all day, but without doubt most of the Bill's provisions have been dictated by the Treasury. The Bill is nothing like as generous as the Conservative proposals would have been if we had had the chance to implement them. We made it perfectly clear in our 1966 manifesto that we would give rate relief by the transfer of services of £90 million a year in England and Wales and £10 million a year by a different method in Scotland. The Labour Party cannot claim that it is being more generous than we would have been had we been returned to office.
I now turn to the Bill itself. I regard Part I and the First Schedule as by far the most important part of the Bill. We are extraordinarily glad that the general grant principles have been accepted and expanded. I should like to know whether the Government have had consultations about dropping percentage grants with the National Union of Teachers and with the Association of Education Committees, because I remember exactly where the N.U.T. and the Association stood in 1957 and 1958 on the subject of percentage grants. They stood firmly behind the proposals of the Labour Party, which were diametrically opposite to the proposals contained in the Bill. My hon. Friend the Member for St. Ives said that the Bill was being debated in a vacuum. In view of what my right hon. Friend the then Minister did in 1957 and 1958 to secure widespread knowledge throughout the country before that legislation was introduced, the present Minister should be ashamed at the paucity of the information which he has offered to the House so that we can have a well informed debate on this subject. None of the factors is known to hon. Members. They are known to the working parties of local authorities, but they are marked "confidential". I have not seen them myself, because I would not claim to see a confidential document from a working party and nor would I expect a local government representative to show me a document marked "confidential".
We in Parliament are discussing these things in a vacuum whereas behind the


scenes all these factors are known. The right hon. Gentleman is, or should be, in a position to tell us what the factors are and their effect. If not, he has not the right to bring the Bill before the House, because to do so would be to sell Parliament a pig in a poke.
I would refer now to the question of the timetable. This was a matter which has been referred to by a number of speakers on this side of the House. I took down roughly the words of the Minister when he said that local treasurers are being asked to do more in respect of this Bill than in respect of any other change which has been made in local government finance since the war. [Interruption.] Very well, in the two Bills. I believe that the Minister is putting an enormous burden of administrative work on the local treasurers and that it is virtually impossible for all of this administrative work to be done accurately and in time so that a new rate support grant Order can be laid before Parliament at the correct time.
The Minister will know that he is asking for a sample on a 10 per cent. basis of estimates of expenditure from district councils. I have seen these forms only today, and they are most complicated and are going to the "sample" authorities throughout the country. I would like to ask the Minister whether he has consisidered how he is to raise that sample from 10 per cent. to 100 per cent? On what basis will he raise the sample? Perhaps the Parliamentary Secretary will be able to tell us. I know that it is a very difficult problem indeed.
Will the Government call on the Cheshire County Treasurer and the Treasurer of the Manchester Corporation to do the calculations for them, as they have done hitherto in respect of grants for the counties and county boroughs, or will the Ministry do this very difficult bit of calculation itself? I consider that the new educational units and the new system of bringing highway grants into this new rate support grant will be extraordinarily complex and difficult and will add many difficulties to those which treasurers are already facing, in working the very difficult administrative procedures which the Government are putting upon everyone in every walk of life.
One point which has been made to me by the Association of Municipal Corporations

is the prime importance of the reliability of the figures in the base year. The Minister will know that the base year for the calculation of his rate support grant is the year before the reorganisation of local government in London. I do not believe that a transferability of those figures which were arrived at prior to the reorganisation of functions in London can be done with reliability in order to arrive at a realistic estimate of what the figures should be in the year 1967–68, which will be the first year of the new rate support grant.
It would be very wise of the Government to consider deferring the operation of the Bill for one year, while, at the same time, giving the domestic ratepayers the benefit of the domestic element. During the Committee stage I shall be very happy to explain to the Minister just how this rather delicate but necessary operation could be done.
I turn now to the specific grants, both old and new. The House must make no mistake that these will be a first charge on the rate support grant. Therefore, the larger the specific grants are, the less general grant or rate support grant there will be for all authorities.

Mr. Crossman: Mr. Crossman indicate assent.

Mr. Temple: I am glad to see the Minister confirming that I am correct in that respect. I know that this is a difficult and complex Bill and I am pleased that the Minister should confirm that I have this clear.
If a national determination is made for a vast increase in police expenditure, as may well happen, the police grant will be taken in as one of the specific grants. But if that unexpectedly grows in size, then the increased burden will fall upon the local ratepayers, who, especially with the reorganisation of police functions, have very much less control over the police authorities than in the past.
This is only one example of many in which I regard this Bill as having a certain underlying aspect, a sleight of hand, on the part of the Treasury. If the specific grants are taken in at what the Minister calls in his White Paper the "historic figure"—and having been taken in as such they are only given the 54 per cent. or 55 per cent.—then, in the


succeeding year, whereas in the other instances they would have been 100 per cent. or some other specific rate. This is a complicated point. I am wondering whether cognisance has been taken by the Government of the Treasury sleight of hand. I have spoken about Treasury sleight of hand before on local government finance.
I am absolutely certain that London and the great conurbations will be the gainers by the whole reorganisation of this grant system. The highway grants will definitely benefit London. The new educational units will do likewise. This will be to the detriment of counties and the county districts. My hon. Friend the Member for Devizes (Mr. Charles Morrison) and my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) made points about the detrimental effect on the counties of recasting the grants. I believe those accusations to be true in general terms. Only when the Minister explains more about the factors will we be able to judge this matter objectively. I know that the County Councils Association shares this view.
What is abundantly clear from the Bill is that the rates of industry and commerce will rise even faster as a result of Government policy, and this must put up prices.
My comment on Part I, which deals with the new support grant system for five or six years ahead, is that it will be a disappointment for everybody and that in some areas the ratepayers will be positively disgusted when they discover the effects of the Bill.
I pass to Part H, which deals with the postponement of revaluation. This is being universally condemned, and I hope that we on this side of the House will do something about it in Committee.

Mr. Crossman: What?

Mr. Temple: We shall inform the Government of our views in Committee. I merely say that the view is universally held that this is a disaster.
I turn to the rating of unoccupied properties, which the Minister fairly described as no bonanza for ratepayers. These provisions need adjustment along the lines of the Local Government (Scotland) Bill. There are two other Parts

to the Bill, Parts III and IV. In view of the complexities of Parts I and II, the Government might well be advised to drop most of the provisions in Parts III and IV if they want to get the Bill speedily through Parliament.
There are many aspects of Parts III and IV on which I should like to comment, but time does not permit me to do so. I should, however, like, through the Parliamentary Secretary, to put one point to the Minister of Agriculture. I have had representations today from the Royal Society for the Prevention of Cruelty to Animals about the views of the Minister of Agriculture on dog licences. The Society rightly takes the view that a dog licence should be obtained when the dog is bought or acquired. I believe that that provision could be brought within the scope of this Bill. I should like confirmation of that, because the Society thinks that this is a matter of very great importance.
The Bill comprises in its latter parts a mass of minutiae. However, I warn the Government that they will need very careful watching indeed. I wish to ask one question on this mass of minutiae. Why is the Minister, who dislikes rating so intensely, preparing for the consolidation of rating law? That seems to be a very inconsistent action even for a man of the eccentricity of the Minister of Housing and Local Government.
I should have liked to say a great deal more about the Bill because there is a great deal in it, but we on this side are united in the belief that it is a big disappointment after the promises which have been made to ratepayers generally and that it will be a tremendous disappointment to those who own small shops and small industrial properties because no relief will be given to them. In fact, the rate burden in those sectors will double before the Act which results from the Bill is superseded by something else.
Rates on those sectors will double within five or seven years, and I am afraid that the administrative strain on local treasurers will be very great. In the Financial Times of 9th June, there was a report of the President of the Institute of Municipal Treasurers and Accountants drawing attention to this factor at the Institute's conference. The report said


that he noted that new services had often been introduced
with little foundation in research, inadequate statistical information and few pilot schemes. This had resulted in signs of strain in the administrative machine.
I warn the Minister of these signs of strain.
We are not opposing the Bill from this side of the House, because we welcome the conversion of the Government to the principles of the general grant. We deplore the deferment of revaluation. It is, as usual from the Labour Party, action before thought. We will do our best to find out what it really means when the Bill is in Committee.

9.31 p.m.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. James MacCoH): The hon. Member for the City of Chester (Mr. Temple) began his speech in a fighting mood. He rebuked us for the inadequacy of our legislation and our failure to grapple with the problems with the vigour and comprehensiveness that there would have been from a Conservative Government. By the end of his speech he had asked us to withdraw all except one part of the Bill. He threatened that if we did not do that we would not be able to get the Bill through Committee. I am quite certain that the local authorities most urgently want this Bill to go through and will very deeply resent any suggestion that it should be carved up in order to meet the prejudices of the Opposition.
I thought one point which he made was unusually unimaginative and churlish, and it must have deeply shocked the hon. Member for Crosby (Mr. Graham Page). This was his mocking reference to our attempts to modernise street lighting. He said that this is a very unnecessary frill which could be dropped from the Bill and could wait for later legislation. As the hon. Member for Crosby could tell the hon. Member for Chester, street lighting is a major factor in the prevention of accidents at night, and there is evidence that adequate street lighting which is integrated with the work of the highway authority will save life. Therefore, I do not think that there is much reason for saying that we should

drop the opportunity of giving the highway authorities a chance for bringing the system up to date.
I wish to deal with one or two matters of detail before turning to the general points of the Bill. The hon. Member for Hemel Hempstead (Mr. Allason) raised the question of the distribution of the educational element in expenditure between the basic payment and the educational units. As far as I can tell, the hon. Gentleman's figures were about right. I say that because the figures are not yet fixed. The difficulty of talking about these matters is that there has to be a great deal of hypothesis about the figures which are used. But there is no reason to quarrel with the hon. Gentleman's figures.
My hon. Friend the Member for Bolton, West (Mr. Oakes) and my hon. Friend the Member for Epping (Mr. Newens) both expressed dismay at the proposal to take school meals and milk away from the specific grants and put them into general grant. They wanted to know if this was the beginning of a cutting down of expenditure on these services. In fact, this has nothing whatever to do with that. As my right hon. Friend explained, the point about taking them into the general grant is that they are services which are generally spread over the school population and do not require an extra special grant. My right hon. Friend the Secretary of State for Education and Science has all the powers necessary to ensure that these services are provided. It is still the duty of education authorities to provide them.
The hon. Member for Folkestone and Hythe (Mr. Costain) asked a very technical question about the control of the Estimates. If I understood the hon. Gentleman's point, he was referring to the recommendation of the Comptroller and Auditor General that the appropriate witnesses for the Public Accounts Committee should be the accounting officers of the Ministry of Housing and Local Government and of the Ministry of Education and other Departments responsible for the services towards which general grant is given. I have no reason to doubt that that will continue to be the practice.
The debate has shown some lack of appreciation of the impact this grant will


have. There have been suggestions that the grant will be vitiated because increases in prices will cut into it and as a result the increased proportion of central Government grant will be absorbed by increased prices. I want to make it clear that this is an increase in he grant in real terms. It is not an increase purely in terms of monetary expenditure. The general grant at present is about 55 per cent. of relevant expenditure; that is, about 52 per cent. of total expenditure. We will pay the grant at the same proportion of total expenditure. We intend to go on giving an extra 1 per cent. in proportion every year. We are not merely meeting increases. We are meeting an increased proportion of increases. The Bill contains powers, as did the previous Bill, for varying Rate Support Grant Orders to meet increases in prices, salaries and wages.
I want to say something about the position that we inherited. The right hon. and learned Member for Hexham (Mr. Rippon) said that the Bill was totally inadequate to deal with the needs of the time. It was fitting that my hon. Friend the Member for Erith and Cray-ford (Mr. Wellbeloved) should have followed the right hon. and learned Gentleman and brought him rather rudely down to earth by quoting from the speech he made in 1962 when he accepted that the existing proportion between national and local expenditure was about right.

Mr. Rippon: I referred to the needs that time. The present time is four years on.

Mr. MacColl: I was coming on to that. The right hon. Gentleman went on in that speech to say this:
I should be the last to stand here and suggest that the present system embodies immutable perfecion. I might in years to come regret taking such a stringent view."—[OFFICIAL REPORT, 2nd March, 1962; Vol. 654, c. 1779.]
We regretted the right hon. Gentleman's absence from the House. He paid rather bitterly for backing the wrong horse on rates. He held up the proper progress of rating reform. He held up having any inquiry into the working of local government finance. He has now come, very bitterly, I am sure, to regret that and he is now in the embarrassing position of having to take a completely

opposite view from that which he took some years ago.

Mr. Rippon: The Joint Parliamentary Secretary said that we held up any inquiry into local government finance. What inquiry into local government finance is taking place now?

Mr. MacColl: We have just had an inquiry into local government finance which was started at the very end of the last Government. This we continued, but we had to recast its recommendations. We are now going on to have a more general review of alternative sources of revenue when we have a new organisation of local government.
When one looks at what emerged from the good wishes of the last Government, it was simply the Rating Relief Bill, a Bill which I was astonished to find the hon. Member for Poole (Mr. Murton) speaking of with such warmth and regretting its disappearance. It must be remembered that the total amount of money which was paid to local authorities under the capitation grant was £6 million. The total amount which was distributed to individual ratepayers over the whole country was £40,000. Only £40,000 got into the pockets of elderly ratepayers. That must be compared with what we have done already in our own Bill.

Mr. Murton: It is interesting that the hon. Gentleman should mention that. In a radio broadcast during the election, his right hon. Friend the Prime Minister said that Poole and Bournemouth had fared better than any other town as a result of that particular Bill.

Mr. MacColl: I suppose that it had some electoral value somewhere. I am sure that we are all glad to see the hon. Gentleman back as a result of the great advantage which Poole got from the Bill, but no one else obtained any benefit from it. The Bill was ineffective and a complete washout.
Our Rating Bill has already got started. I was rather surprised to hear the hon. Member for St. Ives (Mr. Nott) quoting from an article in Local Government Finance. He quoted that part of it which referred to the incidence of domestic rates. I wish that he had quoted an earlier passage, from the treasurer of a rural district council. He said:
Whilst we shall not be able to assess for some time the degree of success which the


rebate scheme has achieved, the manner in which rebate applications are pouring in to my office as these notes are being written leaves me in little doubt that this scheme will at least go some considerable way towards fulfilling the intentions of those who devised the scheme.
The annual report of the Institute of Municipal Treasurers, which was presented to the conference at Torquay, said:
It is to be hoped that the measures of domestic derating that have been taken will enable balanced long-term decisions on local government finance to be taken, freed of the urgent pressures arising from increases in domestic rates.
Those are two quite independent testimonies to the effectiveness of the Act. When I went down to talk to the conference at Torquay, I was prepared to be met with some violent opposition and to be attacked upon the workings of the Act by shock-ridden borough treasurers on the verge of nervous breakdowns. The only complaint that I received was that my right hon. Friend did not appear more on television.
I want now to come on to the problems which face the Government, and the reasons why we have had to approach them in the way that we have. Again the right hon. and learned Member for Hex-ham, in that famous speech which he made on a Friday afternoon long ago, made a remark which had a significance which I am sure that we did not really appreciate. He said:
I think that in some ways the House has under-estimated the full implications of the policies set in hand in the 1958 and 1961 Acts."—[OFFICIAL REPORT, 2nd March, 1962; Vol. 654, c. 1786.]
That was the main trouble with which we were faced. No one realised the full implications of the 1958 Act. We were straitened by the rigidity of the local government reform which was possible under it. None of the main problems which we had to tackle could be tackled under it, and even my right hon. Friend, with his computer-like mind, took a little time to recognise that he could not work the Act and had to start again. It is perfectly true that waiting to see whether it was possible to do something under the Act caused some delay.
The other difficulty which also arose out of the 1958 Act is the actual working of the general grant formula itself. That was so rigid that, while one could vary

the weights in the formula, one could not vary the factors which determined the distribution of the money without further legislation. That has been one of the main reasons why it has not been possible to make the changes which we would like to have made to modernise the 1958 Act.
The criticism has been made, quite fairly, that our Bill is much more flexible than the 1958 Act was, and that not only the weights in the formula but the factors in it can be altered. It is perfectly fair to say that that makes it difficult to appreciate how it will work. However, if one is not prepared to allow flexibility in the grant order to deal with these problems, one will get tied up immediately in an out of date formula which one cannot make flexible enough to deal with the problems involved. I make no apology at all for the fact we have reserved to ourselves the right to come back to the House with orders which can be much more effective in dealing with the problems as they exist at the time.
The right hon. and learned Gentleman asked whether there would be full consultations concerning the regulations before the grant orders are made. The answer is "Yes". He also asked whether some education authorities might lose by the changes. It is quite true that where one makes a readjustment of formulae some people will benefit and some will lose. Both views have been put forward today. My hon. Friends who represent London constituencies complained that what we have done has not dealt with London's needs. At the same time, we have had the counties complaining that we have taken money from them and are preparing to hand it over to London.
The final problem facing us is to get a permanent solution of an alternative source of revenue. As my right hon. Friend has said, that involves a substantial reform of local government in order to get effective units of government which can be relied upon to administer a new system of raising revenue.
The question has been asked about the power of the Royal Commission to look at the financial problem. My right hon. Friend the Prime Minister made it quite clear that whereas there was no directive to the Royal Commission to do that, there was no earthly reason


why, if it thought it necessary, it should not do so.

Mr. Ronald Bell: It is not a matter of whether the Royal Commission has power to look at financial problems, which, I suppose, it would inevitably have to do as part of its examination of the structure, but whether the whole question of an alternative basis for local authority finance was remitted to the Royal Commission.

Mr. MacColl: It was not remitted specifically, because there is no mandate upon the Royal Commission, but it is clear that if in looking at the problems which have been given to it to solve it is necessary to deal with finance as well, there is no reason why the Commission should not do so. It is, after all, a high-powered Commission which can be relied upon to do that.

Sir D. Renton: Would the hon. Gentleman agree that under the terms of reference there is no obligation upon the Royal Commission to consider finance and make recommendations, and that this is an unsatisfactory state of affairs?

Mr. MacColl: I do not want to waste any more time. I simply refer the right hon. and learned Gentleman to col. 292 of the OFFICIAL REPORT for 24th May, when my right hon. Friend the Prime Minister dealt with that point.
I want now to quickly look at the alternatives which the Opposition have offered to what we are doing in the Bill. The right hon. and learned Member for Hexham put forward two possibilities. He said that we could follow the suggestion of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and simply make a general increase in the old grant right across the board. The disadvantage would be that, because of the unsatisfactory nature of the formula enshrined in the 1958 Act, to do that would simply be to produce more anomalies and unfairness.
The right hon. and learned Gentleman's second proposal was that the cost of services amounting to £100 million—for the whole country, and not simply for England and Wales—should be transferred to the Exchequer. This, however, would be a once-for-all operation. It would presumably also mean either that these services would go directly into the

control of the central Government or that 100 per cent. percentage grant would be paid for them. In view of what has been said time and again by the Opposition about the disadvantages of unlimited percentage grants, I do not think that they would really intend to do that. What it would amount to would be to taking-over these services.
What would have been the financial effect of doing that? After taking over the money for the first time and getting the benefit of a substantial reduction in expenditure there would be no more help. There would not be a steady increase such as we are giving. There would be only the one substantial improvement and rates would then continue to rise in the normal way with poundages going up by about 8 or 10 per cent.
Of the £100 million that would be saved, less than half would have fallen to the domestic ratepayer. Of the other half, which would have gone to the commercial and industrial ratepayers, a substantial amount, probably another half, would have come back in the saving of tax. Thus this tremendous gesture of handing over £100 million to the ratepayers would not have been £100 at all: it would have been nearer £75 million. The domestic ratepayers would have received only £50 million, whereas our proposals start with £25 million in the first year, £50 million in the second year, £75 million in the third year, and so on. Clearly, our proposal is more flexible and more effective.

Mr. Rippon: Mr. Rippon rose——

Mr. MacColl: I am sorry, I cannot give way. I have to watch the time.
I want now to refer to some of the points which have been raised on the details of the working of the grant. The hon. Minister for the City of Chester spoke about exemplification. What he said was perfectly fair. One of the difficulties is that we have no effective figures for London. That makes it difficult to produce worthwhile statistics. That is the main reason why we are not anxious to produce figures, which could only be misleading because they would be founded on completely false circumstances.
There are two main reasons why, as far as one can see, some counties could probably lose. The first reason is the effect


of the education units, because the proportion of expenditure in the higher levels of education is greater in some of the urban areas than in the rural areas. The other is that some counties have benefited for quite a time from the weighting of the low density formula. Under the new system they will cease to get that benefit. They will therefore tend to lose. Nevertheless the general shape of the grant is now clear to the House. The total amount is £1,400 million. Of that, £150 million is specific grant, about £1,250 million is rate support grant, of which about £200 million is based on resources, and about £25 million rising upwards is domestic.
I should like to say something about the expanding areas, and I say this with a good deal of personal feeling, because I represent an expanding area. I would be the last person to want to be indifferent to the realities of this problem. One of the difficulties is that the evidence that we have had so far does not justify special treatment of their problems in the formula. If in the course of the arguments in Committee other evidence emerges, it may be that we will find a means and a reason for changes, but at the moment, as far as one can see from the facts—there is a strong case for saying that though the expenditure in expanding areas is high, it is high in other areas as well. There really is no convincing evidence that the element of expansion is the really important thing.
The right hon. and learned Gentleman asked why we had a grant for immigrants from the Commonwealth, and not for expanding areas. He gave the answer to that himself when he asked why we had the phrase in Clause 11 about people who are distinguished by their language and customs. We may sometimes get parochialism over the overspill problem. Even moving people from Lancashire to Cheshire is not moving people who are especially distinguished by language and custom. The whole point of having a special grant limited in this very narrow way for immigrants is to make it clear that we do not regard immigration generally as something which is a social disadvantage, or an economic disadvantage, calling for special assistance, but we

recognise there are certain problems peculiar to immigrants from the Commonwealth. That is why we must treat this aspect separately.
I have dealt as well as I can with the shape of the Bill, and I have no hesitation at all in inviting the House to give it support. It comes forward while we are in the middle of a process of modernising and reforming our whole system of local government finance. This will give not only substantially increased help to local authorities, but is an increase to them which will gather momentum as the years pass. As the pressure gets heavier on local authorities, the proportion of the grant will go higher. Finally, it has the great advantage that it is specially directed towards the domestic ratepayer, and in this respect it is a very fitting partner to our last Rating Act which did precisely the same thing.
We are taunted by hon. Gentlemen opposite that we have done nothing for the ratepayer. It is an insult for this to be said to us by the party opposite, which lamentably failed to do anything for them over the years, and then produced a Bill which was known to be a mockery even before it got on to the Statute Book. It was an insult to the draftsmen to ask them to draft it. It was just too stupid, and, finally, it proved to be utterly ineffective, and has done nothing to help.
Therefore, I think we can with confidence say that we have started on this very important job of recasting the system of local government finances, and that this Bill will be an effective instrument in playing a very important part in doing just that.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

Orders of the Day — BUSINESS OF THE HOUSE

Ordered,

That the Proceedings on the Overseas Aid Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Whitlock.]

Orders of the Day — LOCAL GOVERNMENT [MONEY]

[Queen's Recommendation signified.]

Considered in Committee under Standing Order No. 88 (Money Committees).

[Sir ERIC FLETCHER in the Chair]

Resolved,
That, for the purposes of any Act of the present Session to make further provision, in relation to England and Wales, with respect to the payment of grants to local authorities, rating and valuation and the classification and lighting of highways, and for other purposes, it is expedient to authorise the payment out of moneys provided by Parliament of—

(1) grants to local authorities, for the year 1967–68 and each subsequent year, of an amount equal to the aggregate amount which the Minister of Housing and Local Government determines is to be available for that year for the payment of grants (other than housing subsidies) to local authorities out of such moneys, reduced by such part of that aggregate amount as the said Minister estimates will he allocated to grants for specific services provided by local authorities;
(2) the expenses of any Minister incurred Ander the said Act in paying

(a) grants to local authorities in connection with the development or redevelopment of land, the use of land as a public open space or the reclamation or improvement of derelict, neglected or unsightly land;
(b) grants to port health authorities and to county district councils in connection with the functions relating to aircraft conferred on those councils by or under section 143 of the Public Health Act 1936;
(c) grants to local authorities in respect of expenditure on staff which is attributable to the presence in their areas of immigrants from the Commonwealth,
not exceeding, in the case of the grants mentioned in paragraphs (a) and (b) above, one-half of the amount which, under the provisions of the said Act, is or is treated as, or as costs incurred on account of, expenditure in respect of which the grants may be paid or such larger proportion of that amount as may be payable in accordance with section 185 of the Town and Country Planning Act 1962;
(3) any administrative expenses incurred under the said Act by any Minister; and
(4) any increase attributable to the provisions of the said Act in the sums payable out of such moneys under any other Act.—[Mr. Whitlock.]

Resolution to be reported.

Report to be received Tomorrow.

Orders of the Day — OVERSEAS AID BILL

Not amended (in the Standing Committee), considered.

Clause 1.—(POWER OF MINISTER OF OVERSEAS DEVELOPMENT TO PROVIDE ASSISTANCE TO, OR FOR THE BENEFIT OF, OVERSEAS COUNTRIES.)

10.2 p.m.

The Minister of Overseas Development (Mr. Anthony Greenwood): I hope that it will be for the convenience of the House if all the three Amendments which I have to move are taken together, since two are purely drafting Amendments consequential on the main one. I therefore beg to move the three Amendments on the Notice Paper—

Mr. Speaker: Order. The right hon. Gentleman may move only the first one, but we will discuss the other two with it, if no one has any objection.

Mr. Greenwood: I am obliged, Mr. Speaker. I beg to move, in page 2, line 14, at the end to insert:
subject to the provisions of the next following subsection".
With this, as you have said Mr. Speaker, we may take the two following Amendments, in page 2, line 18, to leave out "the said subsection" and to insert "subsection (1) above" and in page 2, line 20, at the end to insert:
(4) The last foregoing subsection shall not prevent the Minister from making from time to time grants under subsection (1) above to any of the following governments, that is to say, the government of Aden and any government established for any part or parts of the Protectorate of South Arabia. for the purpose of enabling the government to defray any amount by which it appears to him that their resources are or will be insufficient to enable them to defray their administrative expenses; and the power to make such grants shall be in addition to the power to make grants under a scheme under the said Act of 1959.
The need for these Amendments, for which I apologise to the House, has arisen because of an administrative change decided on and brought into effect since the Bill was published. Until recently, the responsibility for our political and economic relations with Aden and South Arabia lay with the Colonial Office. My right hon. Friend the Prime Minister informed the House, in a Written


Answer on 29th April, of the Government's decision that these responsibilities should be transferred to the Foreign Office.
Clause 1(1) would provide me with power to give assistance, whether financial, technical or of any other kind, to promote the development or maintain the economy of a country or territory outside the United Kingdom or the welfare of the people of such a country or territory. This, however, is subject to the reservations in other subsections of the Clause. Among these, the effect of subsection 3 is to provide that dependent territories which are eligible to receive assistance under the Colonial Development and Welfare Acts will not receive financial aid, although they may receive technical assistance under the powers given in subsection (1).
The purpose of the Amendment is simply the avoidance of duplication of powers. Financial aid to the Colonies is, broadly speaking, of two kinds—budgetary assistance to those Colonies lacking resources to discharge entirely from their own resources their own normal administrative expenses, and development and welfare aid which is provided under the authority of the Colonial Development and Welfare Acts. The Colonial Secretary provides budgetary assistance where that is necessary though its cost is counted as part of the total aid programme and he consults me on such assistance to individual territories.
Development aid to the Colonies is provided on Ministry of Overseas Development Votes under the appropriate powers in the Colonial Development and Welfare Acts, which were transferred to me from the Colonial Secretary by the Minister of Overseas Development (No. 2) Order, 1964. It was, therefore, considered unnecessary for me to seek general powers to give budgetary aid to Colonies, and it would not be proper for me to seek to duplicate the powers of the Colonial Secretary in this matter.
The change in departmental responsibilities means that this state of affairs no longer applies in the circumstances of Aden and South Arabia. It would not be appropriate for the Colonial Secretary to continue to provide budgetary aid to

territories in regard to which he no longer exercises any departmental responsibility. It is desirable that responsibility for the administration of this kind of assistance, like that of development aid to Aden and the Protectorate, should be discharged by me and that the funds in question should be borne on the Votes of my Department.
I considered carefully whether the situation I have described could not have been dealt with in some way which would have avoided troubling the House with Amendments to the Bill. I concluded, however, that any alternative course, although technically possible, would be undesirable in principle and contrary to the principle of the Bill.
For my right hon. Friend the Foreign Secretary to provide aid on his Department's Votes, and for my Department, as the one responsible in general for overseas development, to administer it, would breach the principle of unity of responsibility for administration and finance; and even were it legally possible for budgetary assistance to be provided by me under the authority of the Colonial Development and Welfare Acts this kind of assistance was not one of the purposes for which that legislation was intended. Nor has it ever been used for that purpose.
The main general purpose of the Bill is to formulate and establish the powers which I exercise; and budgetary assistance to a territory which is not one of the responsibilities of the Colonial Office is clearly my Department's concern. In my view, the right course is to amend Clause 1.
The first and third Amendments therefore provide that the making of grants to Aden and South Arabia for budgetary assistance shall be within my powers, in spite of the provision of subsection (3) that such assistance to dependent territories generally will be outside them. The second Amendment is purely drafting.

Mr. Richard Wood: I understand the right hon. Gentleman's explanation of the purpose of the Amendments. He was kind enough to write to me before the debate and to explain why he had tabled them. It seems logical that if the Ministry of Overseas Development is to be responsible for the administration


of development aid to Aden and the Protectorate, the budgetary aid in mind should be borne on the Votes of the right hon. Gentleman's Department. Therefore, by tabling these Amendments I believe that the right hon. Gentleman has taken the right course, although I am disquieted by the wording of the third Amendment, particularly the phrase which states:
…the government of Aden and any government established for any part or parts of the Protectorate of South Arabia…
In the last Parliament the right hon. Gentleman must have acquired a considerable knowledge of the affairs of South Arabia. Indeed, as a former Secretary of State for the Colonies he shares the responsibility for the progressive decline of confidence, order and good government in that part of the world.
The Amendment from which I have quoted contains no reference whatever to the Federal Government of South Arabia and one would think that the present British Government would lean over backwards to avoid this further contempt of a Government which they have already treated with the utmost scorn and lack of consideration, ratting on a commitment, to use the words of the Secretary of State for Defence, which had been entered into by my right hon. Friend the Member for Streatham (Mr. Sandys), and not even taking the trouble to inform themselves with which Government that agreement had been made.
The right hon. Gentleman may argue that the words at the end of the sentence which I have quoted,
any government established for any part or parts of the Protectorate of South Arabia
include the Federal Government. So they may. But the fact remains that the Government of Aden, which is referred to first in the Amendment, while keeping its own budget, is, as the right hon. Gentleman well knows, subordinate to the Federal Government. My question to the right hon. Gentleman is this: Why i3 the subordinate Government specifically referred to while the superior Government remains unspecified?
It may well be that a new and larger Federal Government will one day come into being to hold sway over Aden, the States of the present Federation and the States which at present lie outside it. But what we are dealing with here are the

realities of the present, and the realities of the present are, first, the Federal Government, second, the Aden Government, and third the States of the Eastern Protectorate. I find it impossible to understand why the right hon. Gentleman's draftsmen have omitted any reference whatever to the present superior Government in that part of the world.
The Government and their supporters have in recent months barely hidden their dislike of this Government which they have now omitted to name. I have already mentioned the dishonourable repudiation of the 1964 agreement, which, in the opinion of many of us has been aggravated by the devious smokescreen of double-talk behind which the Government now seem to be scuttling. But the right hon. Gentleman will agree that, after all we have seen and gone through, it is hardly surprising that we hold dark suspicions about this omission. At best it seems to us a discourtesy to a Government which has already been deeply wronged. At worst, it argues an intent to undermine the Federal Government still further. We on this side have no wish whatever to deny to the Federal Government and to Aden the budgetary aid which the right hon. Gentleman now asks power to give. but we are seriously disquieted by the drafting of the Amendment. If the Minister wants seriously to prove to us that out fears are without foundation, I ask him most sincerely to ensure that this Amendment is itself suitably amended as soon as possible in another place.

10.15 p.m.

Mr. Ronald Bell: It is most unsatisfactory that an Amendment of this kind should come forward virtually as a new Clause, for that is what it is, in effect, during consideration of the Bill on Report. It should either have been in the Bill when first introduced or it should have come in as an Amendment in Committee. Now, as the House of Commons, we are in a difficult position to deal with it. I am puzzled by the stage of the Bill at which the Amendment appears. As my right hon. Friend the Member for Bridlington (Mr. Wood) said, considerable suspicions are bound to be aroused on this side by the form in which the Amendment comes forward.
Has the production of the Amendment at this stage anything to do with the negotiations which have recently been taking place with the Government of the Federation arising out of the disgraceful repudiation by Her Majesty's Government of their clear commitment to continue to provide defence for an independent Southern Arabia? Is its appearance on the Notice Paper connected with the discussions which we believe have been going on?
The right hon. Gentleman will realise that what he is asking us to undertake by the Amendment is to cover out of the public funds of the United Kingdom any shortfall in the administrative expenses of the Government of Aden or the Federation. I imagine that he will confirm that the amount by which their resources may be insufficient to enable them to defray their administrative expenses would include the expense of defending themselves. Is that right? Is that covered by the wording of the Amendment? If it is—I do not complain of any recompense which we make to these people for the way in which we have been let down—it begins to look as though, as so often, the British taxpayer will get the wrong end of the stick. We shall not defend them as we promised to do. Because of what the Government did in repudiating their obligation, President Nasser and Egypt have been greatly encouraged, and we all know that the prospect of disorder in Southern Arabia is, unfortunately, greatly enhanced by what the Government have done. This, of course, will put an enormous burden on the finances of an independent Southern Arabia.
My question is simply this. Are we by this Amendment underwriting that additional liability which they are likely to incur? If so, I can only say to the right hon. Gentleman that, while I do not quarrel with it if we have obligations to them, it seems that the simplest way of ensuring the viability and continuance of the South Arabian Federation would have been for us to keep our pledged word and do as we said we would do. We might then not have had this Amendment brought forward now.

10.15 p.m.

Mr. John Biffen: I tried to follow the right hon. Gentleman's explanation

and although I am certain that it was a very lucid explanation and that it was deficiencies on my part which did not enable me to grasp the full significance of these Amendments, I would like to ask him whether I was right to believe that as a result of these Amendments certain responsibilities which hitherto have been discharged by the Colonial Office will in future be discharged by his Ministry. If that is so, will not this have some effect on the figure of £137 million mentioned in paragraph 9 on page iii of the Bill under the rubric "Financial effects of the Bill"?

Mr. Greenwood: The hon. and learned Member for Buckinghamshire, South (Mr. Ronald Bell) reproached me for having brought forward the Amendment at this stage. In my speech I twice apologised to the House for the fact that we had brought it forward now and I offered what I hoped was a satisfactory explanation of why this had been necessary. Nobody regretted the need for having an Amendment tonight more than myself. There is certainly nothing sinister in the fact that it has been brought forward now. The reasons are the reasons which I gave and the failure to appreciate at an earlier stage that the only way in which we could properly deal with this situation was by making an Amendment to the Bill.
Certainly, its timing has nothing to do with the negotiations with the Federal Supreme Council which have recently been taking place. I am sorry that the right hon. Member for Bridlington (Mr. Wood) has suggested that there is dislike of the Federal Government on the part of Her Majesty's Government. Nothing could be further from the truth. My own relations with the Federal Rulers have always been friendly and cordial and I certainly do not remember having had any charges of breach of faith made against me during the time when I was negotiating with them. I think that it would tend to get us off the main point of the discussion if we argued once again matters about our relations with the Federation of South Arabia which have been amply clear in the statement by my right hon. Friend the Prime Minister in the House and also by Answers to Questions by my right hon. Friend the Foreign Secretary.
The right hon. Gentleman said that he wanted phraseology used in the Amendment which would cover the realities of the present and also likely future developments. Of course, that is something with which all of us would agree. When the right hon. Gentleman was courteous enough to tell me that he had this misgiving about the wording of the Amendment, I took advice upon it and I understand that the phrase
the government of Aden and any government established for any part or parts of the Protectorate of South Arabia
is an appropriate phrase to use in the circumstances.
It is designed to cover all the constituent parts of the territory generally known as South Arabia, that is to say, the Federation of South Arabia which includes the Colony of Aden, the unfederated States of Upper Yafa, Qaiti, Kathiri and Mahra and the outlying islands of Kamaran, Perim and Kuria Muria. If we were to mention one part of the area it would be difficult not to include all of them and I think that it is the general wish of both parties that ultimately there should be a united country moving into independence in unity and peace.

Mr. Ronald Bell: Would it not be much happier to use the phrase for the whole area, "any part of"? Is not the whole perhaps excluded by the form of words used?

Mr. Greenwood: I am advised not. I will certainly consider whether there is anything in what the hon. and learned Gentleman has said and, if necessary, I will see that an Amendment is introduced in another place, but as at present advised I do not think that the hon. and learned Gentleman is right.
I was also asked how this money was to be used. Part of it, of course, is going on budgetary aid to South Arabia at the present time. Altogether, the total this year is about £10½ million. Hon. Members will have noticed in the last day or two a statement by my hon. Friend the Minister of State for Foreign Affairs in which he has announced that Her Majesty's Government have offered to contribute up to £5,500,000 towards the capital cost of putting into effect the South Arabian proposals for expanding and re-equipping its forces and for increasing

the present contribution to the recurrent cost of the Federal forces by up to £2,500,000 annually.
It is right that I should tell the House that in so far as additional financial aid is for the expansion of the armed forces in the Federal Regular Army and the intended air and naval forces it will be a charge on Foreign Office and Ministry of Defence Votes and in so far as it is applied to the Federal Guard, which, in effect, is a police force, it will be a charge on the Ministry of Overseas Development Vote.

Mr. Wood: Mr. Wood rose——

Mr. Speaker: The right hon. Gentleman has exhausted his right to speak and can do so now only by leave of the House.

Amendment agreed to.

Further Amendments made: In page 2, line 18, leave out "the said subsection" and insert "subsection (1) above".

In line 20, at end insert:
(4) The last foregoing subsection shall not prevent the Minister from making from time to time grants under subsection (1) above to any of the following governments, that is to say, the government of Aden and any government established for any part or parts of the Protectorate of South Arabia, for the purpose of enabling the government to defray any amount by which it appears to him that their resources are or will be insufficient to enable them to defray their administrative expenses; and the power to make such grants shall be in addition to the power to make grants under a scheme under the said Act of 1959.—[Mr Greenwood.]

Clause 6.—(ABOLITION OF LIMIT ON SUMS PAYABLE UNDER COMMONWEALTH SCHOLARSHIPS ACT 1959 AND COMMONWEALTH TEACHERS ACT 1960, AND EXTENSION OF 1960 ACT.)

Mr. Henry Clark: I beg to move, in page 5, line 36, at the end to add:
(3) The Minister shall, when making payments under the said Act of 1960 as amended by the foregoing subsection, have regard to academic and professional qualifications obtained in the Republic of Ireland by the persons concerned.
This is a minor Amendment which I have put down to a Bill under which we are spending some £140 million. The total effect of the Amendment will probably amount to a very few thousand pounds, but I hope that it will prevent the


repetition of an injustice overseas which is regularly committed by the Ministry of Education in this country. For reasons best known to themselves, for many years the Ministry were employing people from the Republic of Ireland, and subjects of the United Kingdom, who have taken university degrees in the Republic of Ireland but have not recognised the diploma in education granted by the Irish universities.
This diploma is fully recognised by the universities in this country, but for some unknown reason, or for reasons best known to itself, the Ministry of Education in this country does not recognise it. In this Amendment I ask that teachers from the Republic of Ireland, and people from the United Kingdom, who have Irish qualifications and are serving overseas, receive full recognition in their salary qualifications for the diploma granted by my own university of Trinity College, Dublin, or any of the other Irish universities which grant this diploma. I will gladly withdraw the Amendment if I can have some assurance from the Minister to this effect.

Mr. Greenwood: This Amendment is superfluous, and I hope that the hon. Gentleman will withdraw it. The purpose of subsection (2) is simply to bring the Commonwealth Teachers Act into

line with the other schemes of technical assistance, such as the Overseas Service Aid Scheme, by enabling me to make payments to persons of the Republic of Ireland as well as from the United Kingdom. Many Irish teachers have already been appointed to overseas posts under the Overseas Service Aid Scheme and we have plenty of experience of the qualifications which they possess and of their value.
I have met many cases where tribute has been paid to the work that they are doing in a number of cases. It is already a practice that my Ministry takes account of academic and professional qualifications obtained in Ireland in making payment under the aid scheme. That practice will continue in relation to payments to be made under this Bill. None of the Acts concerned with technical assistance, including the Commonwealth Teachers Act, refer to particular qualifications and it would be undesirable to begin such a reference now by accepting this Amendment. I hope that in the light of what I have said the hon. Gentleman will withdraw his Amendment.

Mr. Clark: In view of what the Minister has said, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 7.—(THE OVERSEAS SERVICE PENSIONS SCHEME.)

Mr. Henry Clark: I beg to move, in page 6, line 18, at the end to insert:
(3) Regulations under subsection (1) shall not provide for the payment of any pension in respect of service with a local authority in an ex-colonial overseas territory.
This is a much more serious Amendment with a much deeper point. Clause 7 enables us to maintain worth-while facililies for overseas pension schemes to officers serving in local authorities in ex-colonial territories. Without digressing too much, I would like to point out that during the 1940s and 1950s, when these countries were under colonial rule, it was the policy to encourage the development of British forms of local government there. A number of officers serving in the regular Colonial Service, H.M.O.C.S. officers were encouraged to transfer to the service of the local authorities and a cons derable number of them did so, severing their connections with Her Majesty's Colonial Service and the H.M.O.C.S. in doing so. It was thought that, under the local authorities and the municipalities, they had a full career.
When independence came to these territories these people were outside of any compensation schemes and almost without exception the employing local authorities gave very much less favourable terms when independence was granted and the posts were localised than was granted by the Colonial Government.
10.30 p.m.
Many men who transferred from the Colonial Service and entered the service of local authorities found themselves very much worse off than if they had stayed. Yet here we find ourselves giving direct financial assistance to the same local authorities which employ British officers.
Two courses are open to us. We could bargain with the local authorities concerned, such as the municipalities and capital cities in East and Central Africa, and persuade them to pay proper compensation to the officers who had to leave through localisation. If they pay this we could feel at liberty to give every possible assistance to them in employing British officers in the future.
The other course—and quite frankly the negotiations with the local authorities

may not be successful-is to right the wrong that was done when we completely deserted the local government officers whom we had encouraged to take service with local authorities in Colonial Territories. The sum is not so great in terms of the £140 million concerned in the Bill. It would cost perhaps £15,000 or £20,000, and certainly not more than £50,000 would cover it.
A number of loyal British subjects who served the country overseas followed the recommendations of the Government, and their career and prospects have been considerably damaged because the local authorities overseas have not paid proper terms. The Treasury could step in in this case. A real injustice has been committed, and it is no less an injustice and no more difficult to put right because it is four or five years old. The officers who suffered would be ready to receive the money today, even if it is a little late.
It would be only too easy for the Minister to claim that these things were done under another Administration, but I hope that he will not use the party political argument. I am sure that he will not. As we all know in the House, the process of localisation and Africanisation of posts in the ex-Colonial Territories went differently and faster than was envisaged when various schemes in the early 'sixties were put down, and when we thought perhaps that a man had a full career ahead of him in local government. But it was found after a couple of years' independence that his post was localised.
Although it is late, it is time to put right the injustice to these officers or to come to terms with the local authorities. But under Clause 7 we are proposing to give considerable financial assistance in employing British officers to aid them in their very valuable work.

Sir Frederic Bennett: I shall say only a few words in support of what my hon. Friend the Member for Antrim, North (Mr. Henry Clark) said, because he has put the case extremely concisely and very fairly. I hope that the Secretary of State will not give a snap answer to this, but will say tonight that he will have another look at this question. I think that he would accept that over the years in our decolonisation there have been a number


of individual casualties in these local authorities and in other cases.
Like my hon. Friend, I still think that there is a possibility at this stage to remedy it by one or other of the two methods he put forward. Therefore, I make a genuine plea that in refusing this Amendment, which may not be applicable tonight, the right hon. Gentleman should say whether something can be done to rectify the injustice done to quite a small body of people who have suffered, when others did rather better because of the pure coincidence of chance in which branch they performed service on behalf of the Crown.

Mr. Greenwood: I am grateful to the hon. Gentleman the Member for Antrim, North for tabling the Amendment, and also for the very fair way in which he put the case. I know that a number of people feel that they have had a rather raw deal in this respect. I promise the hon. Gentleman that I shall not try to attach the blame to any particular Government.
In the debate on the Second Reading the hon. Gentleman said that he hoped to have a chance to take up what he called the
odd factor that we are now to legalise expatriate local government officers, though strangely enough we refused to compensate expatriate local government officers with pensionable service some years ago…"—[OFFICIAL REPORT, 17th May, 1966; Vol. 728, c. 1211.]
It is in continuance of that that the hon. Gentleman tabled the Amendment.
The hon. Gentleman has tended to confuse two rather separate issues. Expatriate local government officers did not receive compensation for loss of career or a guarantee of their pensions when the territory they were serving became self-governing, because the British Government's undertakings about compensation and pensions related only to the members of Her Majesty's Overseas Civil Service who were serving the central Governments of those territories.
Here we come to the improvement which has been made, because it is now possible under Section 2 of the Overseas Development and Service Act, 1965, to make supplementary payments towards the salaries of expatriate local government officers, and some requests for this

help are coming in. It is also likely that local government employment will be one of the kinds of employment that I shall approve for the purpose of membership of the Overseas Service Pensions Fund. So there are two ways in which we are trying to help in this direction.
However, the Amendment would exclude local government officers from membership of the fund and I think that the hon. Gentleman would regret that as much as I should. Although these men were ineligible for lump-sum compensation, the Government welcome their service overseas and we are prepared to consider requests for help towards their salaries under the Overseas Development and Service Act. They will certainly be taken into account in deciding eligibility for membership of the proposed pensions fund. As the Amendment would exclude them from membership of the fund, I hope that the hon. Gentleman will see fit to withdraw the Amendment.

Mr. Henry Clark: The Amendment is drafted in this form because I believe that it is quite inequitable to subsidise local authorities which failed to pay proper compensation terms when localisation took place. It is equally extremely hard on the men who left their posts at lower salaries than are being paid today but who received no compensation when they see men coming in today on much sounder terms. Before we extend these terms, we must do right by those who served these local authorities in the past. I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

10.37 p.m.

Mr. Greenwood: I beg to move, That the Bill be now read the Third time.
The main effect of the Bill, apart from legitimising myself, if hon. Members would concede that that is possible, is to provide me with the powers I need to sustain and administer our Aid Programme. It will give me powers to provide both financial and technical assistance to independent countries, on terms and conditions which I shall determine; it will enable me to undertake research relevant to the purposes of the aid programme; and, with what is in effect the complementary legislation under the Colonial Development and Welfare Acts, it will for the first time give a firm and


comprehensive statutory basis for the programme. That is what I meant by my remark about legitimisation.
The Bill also deals with two parts of our programme of financial aid, empowering me to meet Britain's financial obligations under the Agreement establishing the Asian Development Bank, and to;make a further and final contribution to the Indus Basin Development Fund. Other provisions will enable me to apply in two particular and important areas of the programme the policy which my predecessor announced in June last year, the policy of granting development loans interest-free in appropriate cases. Clause (6) wiil remove the financial limits at present imposed on certain expenditures On Commonwealth Educational CoDperation, while also enabling persons from the Republic of Ireland to be employed for the purposes of education in the Commonwealth.
Clause 7, a most important Clause of the Bill, constitutes the essential statutory basis for the establishment and the administration of an Overseas Service Pension Scheme and Fund. The power which is proposed here is to make regulations to establish and administer the Scheme and Fund, and the general purpose of the measure is to encourage valuable men and women serving overseas on short-term contracts to serve for more than a single tour, by offering them some security for their future.
I am grateful for the encouraging way in which the Bill has been received in the House. I can assure right hon. and hon. Gentlemen that we are studying carefully the various issues which they have raised in our debates on the Bill, including those which have been raised tonight, particularly where they have been in any way critical of our present policies and practices.
I believe that there is general support in the House for the principles and level of our aid programme, for the capital aid and financial assistance which we are giving, for our encouragement of tropical research, for our help in enabling young people to serve overseas, and for the general contribution which we are making to stop the gap widening between the richer and poorer countries.
I hope that the House will now be prepared to give this very necessary Bill an unopposed Third Reading.

10.40 p.m.

Mr. Wood: I think that the right hon. Gentleman will agree that the Bill has had a relatively peaceful passage, both here and upstairs, and, in spite of any criticisms or suggestions that we may have had to offer, I myself still welcome it warmly, if only for the fact that it has the effect, as the right hon. Gentleman put it, of legitimising the right hon. Gentleman himself.
As he pointed out at an earlier stage, this is a machinery Bill. It is quite clear that what comes out will largely depend on what the right hon. Gentleman manages to persuade his colleagues in the Cabinet to feed into the machine. I am bound to say that some of us are inclined to be a little pessimistic about the future development of aid. Even the National Plan, which makes provision for only a small rise over the levels of the current financial year, was not over-optimistic. Since the National Plan was issued and even since the Second Reading debate, a number of us have begun to wonder exactly how seaworthy the Plan is at present.
A good many of us entertain forebodings that, by their own decisions and perhaps even more by their indecision, the Government are pushing further away the attainment of those levels of aid which were dangled seductively before the eyes of the electorate two years ago.
I have been encouraged by the attention which has been paid in our debates to the quality of aid as well as its quantity, and to obtaining value for money. The right hon. Gentleman will recall the denunciation by one of his hon. Friends, the hon. Member for Kingston upon Hull, West (Mr. James Johnson), at an earlier stage, of the constructive criticism of my hon. Friends as patronising and paternalistic.
Most if not all of us share the right hon. Gentleman's view about the noble possibilities of the relatively affluent nations giving help to the relatively poor. Most of us feel that Britain has the right to ask that the resources transferred shall be used to the best effect, because newly-independent countries will sometimes make choices which prove to be mistaken. As I pointed out at an earlier stage, those are not the sentiments of


my hon. Friends, but the words of the right hon. Gentleman's own White Paper.
In saying goodbye to the Bill, I wish it well. I hope that the right hon. Gentleman will take seriously the points which my hon. and learned Friend the Member for Buckinghamshire, South (Mr. Ronald Bell) and I raised earlier in our debate when the Bill goes to another place, to see whether there is scope for amending it to take account of those points. While welcoming the Bill itself, we shall certainly continue to watch extremely carefully how it is used in the future.

10.45 p.m.

Mr. Cranky Onslow: It is a matter of some regret to me that I was not fortunate enough to be a member of the Committee which considered the Bill. But perhaps I might still make it plain to the House that I still entertain the criticisms which I have voiced against it.
They concentrate most forcefully on Clauses 1 and 2. I have no objection to the fact that Clause 1 legitimises the Minister. What I object to is the effect that it has in carrying further a process of institutionalising the handling of aid in this country, progressively creating something approaching a Government monopoly. This is happening at a time when the climate of opinion in underdeveloped countries is probably becoming much more receptive than it has been recently towards private endeavours in economic investment.
The effect, therefore, that I see flowing from Clause 1 is that we shall be moving out of phase with developments taking place in the world at large and creating a situation in which aid from this country becomes something much more closely approaching protection money and we, the British, in the international comity of nations, will be relatively, in modern historical terms, in something like the position which the Italian or Jewish financiers held in mediaeval Europe. This is a bad thing.
Clause 2 also will have bad effects. I believe that the money that we put into the Asian Development Bank will be of much greater benefit to, say, the Japanese than to ourselves, because we will be unable to provide from private resources

investment capital to take up the opportunities which will go to our competitors. The crowning irony of the situation is that we are, in effect, subsidising our competitors with money which we have borrowed.
This is a peculiar situation. I doubt whether the recipients of British aid understand its peculiarities. I doubt whether they are reconciled to the eccentricities of our behaviour by any belief which we may maintain that we are acting in some way on moral grounds. I believe that they regard these appeals to moral obligation as being in many respects bogus as, I think, they are.
There is, however, one point in the Clauses of the Bill which I commend. The Minister has power under Clause 1 to conduct research. I appeal to him to use this power to conduct some really fundamental research into the effects of economic aid, as at present administered and as administered over the past 15 years, upon the potential development prospects of the developing countries and upon our economy. I doubt very much whether any work in this direction has been undertaken. The Minister has carried out research into the detailed aspects of development aid, but this great fundamental question seems to me to be completely ignored.
I do not believe that the conspiracy of silence on this subject should be allowed indefinitely to continue. I make no apology for stating this point of view. I stated it on Second Reading and for my pains I was called a rogue elephant by the Parliamentary Secretary. I am sorry that the hon. Gentleman is not present; but I must say it needs a rogue elephant to operate in this jungle—and it is a jungle.
If we are searching for what my hon. Friend the Member for Torquay (Sir F. Bennett) called a national ethic in this context, we should apply to the administration of British money through public or private channels overseas the same sort of tests which hon. Members below the Gangway on the benches opposite are so eager to apply to the application of British money overseas for defence purposes. We should apply a cost-effectiveness test. By that test, taking into account the money which has been involved, I believe that history will show


that we have wasted money, we are wasting money and we are making it progressively more difficult for us to achieve the real aims of prosperity and progress in the underdeveloped world, which I for one, and, I believe, the whole House, genuinely wish to see achieved.

10.49 p.m.

Mr. Peter Hordern: In echoing the words of my hon. Friend the Member for Woking (Mr. Onslow), I wish, first, to apologise to the House for not being in my place on Second Reading and to say how much I regret not being called upon to serve during the Committee stage of the Bill. Having said that, I must say that I found my thoughts going entirely along the lines of those of my hon. Friend the Member for Woking (Mr. Onslow).
I have merely three observations to make at this point. The first is that one has to consider in this Bill whether it is desirable that overseas aid should be provided in the form that the Bill provides. I think that there is altogether too much of an attitude of acceptance of overseas aid in the sense that it is bound to be right if we can simply dole out more.
I think that this attitude is becoming increasingly questioned, and most notably by the academic world. There is now considerable intellectual dispute about the merits of grants of overseas aid in the form that it is at present carried out. Professor Bauer of the London School of Economics thinks, as I understand him, that overseas aid in the way that it is at present doled out is altogether valueless. On the other hand, there is Professor Galbraith whose argument is that even on the most mundane level, on the most disinterested viewpoint, it must be sense to assist overseas territories and overseas countries that need it, to help them to buy our goods eventually.
I feel that the whole subject matter needs a great deal more discussion and careful examination than it has had. I also believe that there is far too much emphasis on the giving of national aid. Surely the point has now arrived at which we can increase international aid by strengthening the various international agencies? I think that the days in which national aid is given should be on the decline, because the fact of the matter

is that the recipients of this aid so often regard it as a form of colonialism, and this, I feel, is something which even the Government would tend to regret.
But if it is agreed that we should provide aid, are we doing it in the correct way, and how is this aid being evaluated? As I understand it, 59 per cent. of aid given by this country is at present tied to purchases from this country. In a most exhaustive examination made by the Brookings Institute in the United States, it was found that no less than 90 per cent. of their aid was tied to purchases from the United States. I cannot for the life of me see why, on the subject of evaluating aid, we cannot follow more closely the pattern that occurs in the United States.
Are we sure that sufficient cost effectiveness techniques are used on the aid that we produce from this country? I am not clear that this is so. and, having read the Second Reading debate, I think that the right hon. Gentleman was not at all satisfactory in his answers on this point.
The third point that I wish to make is simply to ask whether we can afford this sum of £225 million. As I understand it, it represents a 12½ per cent. increase over the amount of aid given last year. I notice also that the National Plan, dealing with 1970, makes no provision for any great increase in the amount of aid, but the National Plan, of course, calls for an increase of 25 per cent. in the gross national product. What is to happen if, as seems all too likely under this Government, there is virtually no increase in the gross national product? Is the aid to be cut back, on the Government's own assumptions? Is that the position?
But it is not simply the fact that we are now having to spend £225 million on aid. That is not the cost to the country at the moment. The cost to this country is the cutting back of productive investment overseas by private organisations. This is the real cost that we are having to pay. Public and private companies are being forced to apply to the Treasury and to the Bank of England on every occasion on which they wish to invest more than £25,000. They have to show that they can show a reasonable return within two or three


years of such an investment being made. Much of this desirable investment is being held up because of balance of payments difficulties, and yet the amount that we give away is being increased. I do not wish to object at this stage to the way in which we give this aid, but surely, if the Chancellor of the Exchequer is right to say that we cannot afford to invest a deficit, it is reasonable to ask, how can we conceivably afford to give it away?
I make no apology for introducing a discordant note into a thoroughly amiable debate. We cannot afford aid on this scale in our present situation, even if it were, which is doubtful, proved to be desirable.

10.55 p.m.

Mr. Biffen: I wish to join my hon. Friends the Members for Horsham (Mr. Hordern) and Woking (Mr. Onslow) in expressing some doubts about the Bill. Unlike them, I was privileged to take part in the discussions in Committee. I am sorry that they were not, otherwise the whole business might not have been expedited in the cosy way in which it was in one morning. I am extremely suspicious of any Bill dealing with sums of money of this magnitude which goes through the House in this fashion.
I am particularly suspicious when there appears to be that unholy coalition of Front Benchers and we are told that the only point to deplore about the Bill is that it would appear, particularly in the context of the National Plan, that it does not provide for accelerating sums. I find this a curious philosophy to come from a Tory Front Bencher.
The right hon. Gentleman told us that he was grateful for the encouraging way in which the Bill had been received. He was grateful for the way in which we were apparently prepared—at this of all times—to agree to public expenditure on the scale of £137 million, when we know what consequences are being wreaked upon our economy by our balance of payments situation.
The Minister went on to tell us that he was encouraged by the general acceptance of the principles and the level of the aid programme. It is upon the principles and the level that I should like to add my discordant voice to those of my hon. Friends. The principles are

undoubtedly contained in Clause 1, because the effect of the principles is that Clause 1 provides for Government to Government aid. We are told that the functions of the Minister of Overseas Development
…shall include power…for the purpose of promoting the development of, or maintaining the economy of, a country or territory outside the United Kingdom or the welfare"—of its people.
As my hon. Friend the Member for Horsham has pointed out, we are not considering this matter in a vacuum, but at a time when overseas private investment is being restricted, when imports of manufactured goods from territories which are recipients of aid carry a surcharge, and when all those countries are fearful that this may be replaced by physical quotas. My fear was particularly underlined when I read in the Financial Times, for example, the story of one overseas country, namely the Ivory Coast, which enjoys one of the most rapidly rising standards of living in Africa. The Financial Times says of President Houphouet-Boigny:
He has allowed the Ivory Coast to evolve along free enterprise lines—
The economic results of his policy have been spectacular. It is precisely the principles contained in Clause 1 which will not allow this country to participate in that kind of assistance. I cannot believe that it is tolerable for this kind of principle to be enunciated as though it embraces both sides of the House. I do not believe that that is true. It is certainly not true to say that those who are opposed to this principle are indifferent to the challenge which is presented by the gap in the living standards of developed and under-developed countries This is not an argument between the hawks and the doves, but a question of philosophy as to how best an economically emergent territory can be developed.
I am not enamoured of national planning and the machinery of Governmentto-Government aid. I am not so ennamoured of national planning in this country that I think it is a suitable subject for export and, make no mistake, the philosophy and techniques that flow inevitably from Clause 1 necessitate national planning in the recipient countries. We have seen that only too well at work in India. Let us consider the


experience of Hong Kong. The Times of 27th May reported that Hong Kong has the highest per capita income in Asia. This is a magnificent triumph for free enterprise, and this is essentially a free enterprise territory.
There might be muted laughter from the Liberal benches, but I suspect that the hon. Member for Cheadle (Dr. Winstanley) is merely enjoying the prospect of Scottish hon. Members having lost their sheep.
I now want to refer to the other principle to which I object. I asked a question of the Minister earlier this evening about the figure of £137 million which appears in paragraph 9 of the Financial Memorandum Bill. I asked a simple and charitable question of whether that figure had been affected by the Amendments which we passed to Clause 1. He gave no answer and I am assuming that it must have some effect. I am assuming that it must make the figure appear a somewhat modest estimate. Therefore, my plea is that, even if we were to condone this kind of Government-toGovernment aid we are contemplating levels which are far in excess of those which are dictated by our economic circumstances. I do not believe that this level of aid is good for this country or that this kind of Government to government aid is the most of productive for the commercial and industrial prosperity of recipient countries. To paraphrase the Merchant of Venice, I believe that it is twice cursed to both the donor and recipient.

Dr. Winstanley: Before the hon. Member sits down——

Mr. Deputy Speaker: The hon. Member had sat down.

11.4 p.m.

Mr. Henry Clark: I am in considerable agreement with my hon. Friends who have spoken. My hon. Friend the Member for Woking (Mr. Onslow) has perhaps made the most valuable contribution to the discussions on the Bill. It is unfortunate that a Bill of this scope should be the second Order on a long day after having had only a short Committee stage because the House was about to go into recess. The Bill should have been discussed at greater length and had considerable thought devoted to it. There are a number of detailed points I would

have liked to have raised reflecting the sentiments put forward by some of my hon. Friends.
We should say that the C.D.C. is a great financial corporation working on commercial lines and sticking to the sound commercial principle of making profitable investments. The C.D.C. is now to be allowed to carry out non-profitable investments and to milk its profitable investments to subsidise non-profitable schemes. This is exactly the kind of move which my hon. Friend the Member for Oswestry (Mr. Biffen) described as being retrograde. A scheme which is profitable, no matter how small, is 10 times as good as one which steadily loses money and which steadily strangles itself with its own debt.
Over the years the C.D.C. has built up considerable expertise in operating schemes in agriculture and industry overseas. I sincerely believe that it should stick to the principle—remembering that it publishes its balance sheet in the Financial Times and elsewhere—that it is a commercial organisation. When it does undertake non-profitable operations it should do so as the managing agent for the Ministry and should receive not only interest-free loans but a managing agent's fee so that it does not follow the thoroughly unsound commercial principle of taking money from the profitable concerns to try to bolster up the unprofitable ones. I suggest that the Minister looks at this problem and considers paying the C.D.C. an agent's fee when it goes in for non-commercial operations for seven years or whatever the period might be, although they will probably remain unprofitable for yet seven years after that.
On Second Reading I emphasised that the Bill was being introduced with no assurance that we will receive continuous information about how the money is being spent. The Parliamentary Secretary cheerfully said that it was a happy Ministry which always wanted everybody to know as much about the subject as possible. But there is a great difference between a Ministry which issues a White Paper when it has some splendid news to offer and a Ministry which is disciplined to produce reports on fixed dates each year and to show whether things are good or bad. In such circumstances the Ministry knows that on a certain date it will have to answer questions in Parliament.
We must have a fuller answer from the Minister to the questions which my hon. Friends and I have asked. We want to know just what information we shall be getting from the Ministry at regular dates and what opportunities we shall have to probe the spending of this £137 million at regular, stated intervals and not, as is suggested, when the Ministry happens to issue a White Paper, no doubt in the middle of the long Recess. We are entitled to answers to these questions to be sure that we will be able to probe the activities of the Ministry in this sphere.

11.8 p.m.

Mr. Ronald Bell: I wonder whether my hon. Friends who have spoken are really uttering a discordant note or whether the views which they have expressed are not widely reflected in the community—and, perhaps, on both sides of the House. Because overseas aid is altruistic in its purpose, it has become one of the golden calves which we all worship, and this has gone to the length that we no longer seem to bother to count the cost.
My hon. Friend the Member for Oswestry (Mr. Biffen) and others have said that the Bill has whistled through Parliament at a quite remarkable speed. It authorises the expenditure abroad of £140 million and it would be wrong to think that this is the total of our foreign aid programme. This is merely that part which comes under the responsibility of the right hon. Gentleman. And when one looks at our annual balance of payments statement, one can see clearly how large an element in our foreign expenditure is this question of aid in the form of grants and loans. If we had a vast surplus in our balance of payments it would be much easier to justify a Bill of this sort. But we all know that, yet again, a great rescue operation is being mounted for sterling. I have lost count now, but it is certainly not the first. Only last weekend, one saw cartoons in the Sunday newspapers showing Britannia being rescued from the waves, with the caption. "Isn't it time the lady learned to swim?"
This is the situation we are in. We seem to have a chronic deficit in our balance of payments, yet here we are

giving away any number we can think of, doubling it, and carrying on still further. If there is trouble in, for example, Aden, all right—dole out a bit more money. Anywhere else in the world, the practice is the same: always the solution in the end, the compromise or face-saving formula, is at the expense of the British taxpayer. Now, we have almost stopped counting. Dare I point out, in the presence of my hon. Friend the Member for Antrim, North (Mr. Henry Clark), that it is proposed under this Bill to pay for Irish teachers to go from Ireland out into the Commonwealth and come back again, all to be at the expense of the British taxpayer, not the taxpayer of the Republic of Ireland?
I have been worried for some time, as some of my hon. Friends have been, by the effect of this sort of thing on this country and, in particular, on the level of interest rates in the United Kingdom. We are all worried about the level of interest rates, but, of course, it is not governed by Bank Rate primarily; it is governed by the supply and demand for money available for investment. This country has been pouring out over £200 million a year, I should say, in grants and loans and this money, therefore, is not available to satisfy the demand for new investment in the United Kingdom. In 1964, the year which we heard so much about during the recent election, on our commercial operations we had a surplus, but that surplus was turned into a large deficit by Government overseas expenditure. What we are discussing now is one of the main elements in Government overseas expenditure. If we did not hand out these vast sums, even though we had heavy defence commitments overseas and heavy expenditure in foreign currency, we should nevertheless. with those undiminished defence commitments, still have a large surplus on our balance of payments. Certainly we should have had in 1964.

Mr. Greenwood: Mr. Greenwood indicated dissent.

Mr. Bell: I accept that I am wrong there; we should not have had it in 1964. But it is about one-third for these purposes and about two-thirds for defence in Government overseas expenditure.
This withholding of money from the capital market in the United Kingdom has a double effect. It slows down the


expansion of our economy directly because the money is not available here. It slows it down indirectly because it raises interest rates for everybody and for every purpose. Because we have such high interest rates compared with other countries in Europe and the world, our industrial development lags behind. Our growth rate is far too low. Yet we go on, year after year, with this process which, however well meant, in the end defeats the very purpose envisaged in a Bill of this kind because it diminishes our power, if we wish to help the rest of the world, so to help.
There is then the question of the effect of this aid on the recipients. It was very clear from the last Budget what the nature of the operation is. We stop our industrial firms investing in the Commonwealth in order to have available money for this sort of operation—though I hasten to point out to the right hon. Gentleman that, in fact, we still do not have it. Anyway, that appears to be the object of the exercise.
Investment in the developed sterling areas is now virtually forbidden, and investment in the undeveloped sterling areas is not exactly easy. As my hon. Friends the Members for Antrim, North and Oswestry have said, aid is being channelled from Government to Government. How much more beneficial it would be if this were commercial development by commercial firms, fitting in with the economy of the countries concerned! It is now something like 18 years since the groundnuts, the sunflowers, and the chicken farms, but the lesson is the same. That was all British Government development in overseas territories, whereas now we have British money going out to the overseas territories in ways which are thought fit; and we all know the sort of prestige projects on which this money tends to be spent.
One can envisage operations of a pump-priming kind, but unfortunately most of these commitments tend to be what one might call running commitments, all remaining a burden on the economy of this country. Furthermore, they debilitate the natural growth of the country to which they are directed, and I say that if the Minister is going to use all this money and at the same time send Dr. Kaldor into these developing countries, then I really

think he would do less harm at home: although I agree that that is a controversial point of view.
Lastly, i question the legitimacy of using the law-making powers of this country for doing this kind of thing. If one takes money from people under the compulsory processes of the laws of taxation and give away the proceeds to foreign countries for some direct national advantage, then I think that can be justified. But if, in a spirit of benevolence and on the principle that the strong should aid the weak and the richer give some of their wealth to the poorer, then I do not think it is right that people should be generous at the expense of other people.
There should be nothing whatever to prevent those who think that funds, as distinct from commercial development, which is what I advocate, should be set aside. There should be nothing which prevents them from setting aside part of their worldly goods and sending them out. What they are not entitled to do is to use the law-making powers of this country to be generous with other people's goods. That is the wrong kind of gesture; but this Bill is just that kind of gesture. There is too much talk of duty to other people and too much disposition to apply the proceeds of other people's productive effort for these purposes with which we are concerned tonight.
I regret that we are not opposing this Bill. Some good may flow here and there from this kind of aid, but in principle this type of operation is wrong. We should do better if we left the money in people's pockets and left them to help commercially, applying the law of supply and demand. Malaysia is a country where that kind of operation has been going on, and let us compare it with a country where all the aid is from government to government. Malaysia is prosperous in its own right and to the extent of its own development, if it is prosperous, and not prosperous by the continual injection of money from the British taxpayer.
I am very glad that my hon. Friends have raised the subject tonight and I hope that never again will we slip a Bill of this magnitude and this significance through the House of Commons in the way that this Bill has slipped through.

11.20 p.m.

Sir F. Bennett: The Government are already aware of the fact that the Bill


has received general support from both sides of the House, not only through an unholy alliance of the two Front Benches, if I can be so prematurely immodest, but also because it has achieved an unopposed Second Reading. The right hon. Gentleman, however, should take careful note of the remarks made in the last half an hour or so, for they have reflected what is a growing concern in the country which it would be wrong for him to neglect. It is happening quite widely throughout the Western world that, without neglecting what has been called the national ethic, people have started to query, almost for the first time, what this is all about, what it is intended to achieve and what in fact it is achieving. We do not do any good by ignoring the fact that there is this growing concern in public circles throughout the Western world about what our form of aid is intended to achieve and whether it is achieving it.
To my hon. and learned Friend the Member for Buckinghamshire, South (Mr. Ronald Bell) I shall say only one word in controversy. It is to assure him that there are some countries in some parts of the world where, while there are great potential investment possibilities for this country, they cannot possibly reach that stage through private investment. There are some parts of the world which simply do not have the ability and private enterprise in this country, certainly at present rates of taxation, does not have the ability, to create what is loosely referred to as the infrastructure. There is no money to be made by private enterprise today from building roads or ports in Africa and whether we like it or not, this infrastructure must be provided through some financial source. Unless we alter the whole system of taxation in the West, the days have gone when private enterprise could provide the platform on which more profitable forms of investment later on could be built.
Except for that, I repeat that we have every right on this side of the House, as have hon. Members opposite, to watch very closely, whatever party is in power, what has been referred to as cost effectiveness. It is not just cost effectiveness, but effectiveness as such, because there is effectiveness in political terms and in long-term economic terms. But we have

the right and duty to press any Minister who administers sums of these sizes raised from the taxpayer much more closely than has been done in the past for details of how the money is being used and whether it is being used to the best purpose in the right places.
I hope that the right hon. Gentleman will take account of the feelings which have been expressed tonight and not imagine that because the Bill has received an unopposed passage, that means that this growing public concern has thereby been allayed. Obviously, everyone will be much more watchful in future and it is for the right hon. Gentleman as the Minister concerned to make sure that more information is given in future than has been given up to now.

11.25 p.m.

Mr. Greenwood: By leave of the House, I would like to reply to some of the points made in this extremely useful and interesting discussion. One of the most remarkable features of the debate has been the revelation that so many hon. Gentlemen have a passion for sitting on Standing Committees. Those who did not sit on the Standing Committee deeply regret it, and those who did look back upon it with a certain nostalgic pleasure. I have no doubt that the Whips on the Committee of Selection will have noticed the keen aspirants who have revealed themselves in this debate tonight, and bear them in mind for membership of future Committees.
I have listened very carefully to the criticisms, many of them constructive, which have been made, and I very much welcome the fact that the right hon. Gentleman the Member for Bridlington (Mr. Wood) and the hon. Gentleman the Member for Torquay (Sir F. Bennett) have stressed the need for getting value for money. I accept that it is an absolutely essential requirement of the aid-giving operation. I do not think that it is the only criterion that we have to meet, but we are entitled to see, when we are spending other people's money, as the Government are doing when national resources are diverted to provide aid for other countries, that the money is used in a way which will be conducive to the improvement of living conditions in those countries.
All of us have a great deal to learn in the field of aid, particularly in the


management of aid. That is something with which the other principal donor countries would agree. But we are building up very valuable experience in this respect, not only among the donor countries but among the recipient countries as well. It is enormously encouraging to find that in the developing countries one is now getting a new, young class of civil servants, development economists and development engineers, who are coming from these countries and trying to help with a real understanding of the needs of the country.
I very much welcome the assurance given by right hon. Gentlemen and hon. Gentlemen opposite that they will watch very carefully how I use the powers given to me in this Bill, and that they will also watch the day-to-day workings of the Overseas Development Ministry. I can assure hon. Members on both sides of the House that if they want any information about what we are doing, either through Parliamentary Questions or through visiting my Parliamentary Secretary or myself, they will certainly be more than welcome. The hon. Gentleman the Member for Woking (Mr. Onslow) suggested that perhaps some of the research activities which we undertake might be into the effects of development aid. That is not quite the type of research envisaged in the Bill and I do not think that it is really necessary, because a review of the whole aid-giving process is being made continuously, not only by the specialists in my own Department, but also by organisations like the D.A.C. the World Bank, the O.E.C.D. and the other international organisations.
We are gradually building up experience into the best ways of giving aid and into the effects which the aid we give has in the countries that we want to benefit. The hon. Gentleman the Member for Horsham (Mr. Hordern) struck one responsive chord in my heart when he talked of the need for developing international aid and suggested that we should strengthen the international agencies. That is something that I would very much like to do. At the moment we are giving about 10 per cent. of the aid through international agencies, and I would like to see that amount gradually developed. In the long run this is the most satisfactory and least

contentious way of giving aid to countries which need it.
It is a matter for congratulation that in most of the international agencies we rank second among the various countries which contribute. At the same time I think that the hon. Gentleman would agree that in the immediate present we have a special responsibility to countries which were until recently under our rule and whose economic future we have to do everything in our power to help if that political independence which they have acquired is to become a real independence, economic as well as political.
I was interested in what the hon. Gentleman said about the need for tying aid, and his reference to the figure which has been quoted before in the House that the Americans tie 95 per cent. of their aid. I am always a little dubious of figures about the exact degree to which aid is tied, and there are ways and means of getting round even the very high degree of tying like the 95 per cent. to which he referred.
In a matter of this kind, we have to be careful not to seek to tie aid so rigorously and inflexibly that the Government or country which is receiving the aid finds it almost impossible to meet the local costs. I am very conscious of the importance of tying aid to British goods and services, and I know that my officials in the Ministry are equally conscious of it.
The hon. Member for Oswestry (Mr. Biffen) suggested that we were spending too much on aid. If we were to reduce the flow of aid we should almost certainly find that other countries took similar action, and the flow of aid to the developing countries, which is already slowing down, would dry up almost to the point of disappearance. If that happened, the effect on our own trade would be very significant. We cannot completely clear our minds of the possibility that if we, as a friendly country, do not give aid to the developing countries there are always other countries which are prepared to step in, whose motives may not always be the same as ours. The hon. Member for Oswestry suggested——

Mr. Biffen: The right hon. Gentleman would not in any sense seek to misrepresent my view of this. Would he accept


that at no stage did I put forward the argument that the total capital outflow of this country should be less? My whole argument was primarily designed to suggest that the Government-to-Government share was far too great.

Mr. Greenwood: I hope that I did not give the impression that that was not what the hon. Gentleman said. That was not my intention, and I did grasp the full point which he made. Perhaps in view of the lateness of the hour I am indulging in a little shorthand which did not accurately represent what he said.
I am grateful to him for reminding me that in replying to the Amendment I did not answer his question about whether the new Aden and South Arabian proposals affect the £137 million. The truth is that they do affect that figure, but they do not affect the ceiling of £225 million. They were already contained within that ceiling.
The hon. Member for Antrim, North (Mr. Henry Clark) very properly again raised the question of the Ministry of Overseas Development issuing an annual report. That is a very important point, because it would help to do what the hon. Member for Torquay suggested; that is, to tell people what aid is—what it is about, what it is intended to achieve, and what it is achieving.
The public has a right to know what the Ministry is trying to do, how it is doing it, and what success it is achieving, or what errors of judgment it has been guilty of. I would hope that at regular intervals the Ministry will produce an annual report or White Paper.
The Ministry has been in existence only since October, 1964, and it is not very easy at this stage to say in what form our annual presentation of the facts should be made, whether it should be a White Paper or an annual report. But certainly it is my intention that some time in the autumn we shall be able to place before the House and the public a review of what we have been doing since the White Paper issued last August.
I hope that it will be possible to produce a White Paper or report at a

time which is more convenient to the hon. Gentleman than the middle of August to which he referred, although there is always the possibility that this year we may be sitting in the middle of August if we are to work as hard as the hon. and learned Member for Buckinghamshire, South (Mr. Ronald Bell) wishes.

Mr. Onslow: I am grateful to the right hon. Gentleman for giving the House this assurance. Would he go still further, particularly in the presence of the Leader of the House, and express a wish that the House should be able to debate such a report?

Mr. Greenwood: I will certainly consider that. I have no doubt that my right hon. Friend the Leader of the House has heard the point which the hon. Gentleman has made.
I was on the point of referring finally to the comment on the hon. and learned Member for Buckinghamshire, South that the Bill had whistled through the House. I am not quite sure upon whom this is an animadversion, but I notice that the discussion in Committee took 1 hour and 27 minutes. There was an opportunity for sitting for the whole of the morning and on the following Thursday morning. We could have had resumed sittings of the Standing Committee after the Recess if hon. Members had been so anxious to give the Bill the thorough going over to which the hon. and learned Gentleman referred. In fact, from beginning to end, except for the Amendments tabled yesterday by the hon. Member for Antrim, North, no Amendments were tabled by hon. Members opposite. So no one should complain that the Bill has whistled through the House. Hon. Members opposite should congratulate themselves on the general support that the Bill has received from Members of the House, which has facilitated its progress to another place.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Orders of the Day — MALAWI (GIFT OF A SPEAKER'S CHAIR)

11.36 p.m.

The Lord President of the Council and Leader of the House of Commons (Mr. Herbert W. Bowden): I beg to move,
That Mr. Andrew Faulds, Sir George Sinclair. Mr. G. R. Strauss and Sir John Vaughan-Morgan have leave of absence to present, on behalf of this House, a Speaker's Chair to the National Assembly of Malawi.
It may be for the convenience of the House if this and the following Motion be considered together.
The House will no doubt recall that in continuation of the tradition of presenting gifts to newly independent Commonwealth countries it has approved Motions giving a Speaker's chair to the National Assembly of Malawi and a bookcase to the House of Representatives of Kenya. The Motions, if approved, will give leave of absence to the delegations which are to take the gifts to Malawi and to Kenya.
The House may wish to know that the composition of the delegations to carry out these agreeable tasks has been arranged in consultation with you, Mr. Speaker, and that Mr. J. F. Sweetman, a Senior Clerk of the House, will accompany the Malawi delegation, and Mr. H. R. M. Farmer, Clerk Administrator (House of Commons Services) will accompany the delegation to Kenya.

Question put and agreed to.

Orders of the Day — KENYA (GIFT OF A BOOKCASE)

Mr. Hugh Fraser, Sir Barnett Janner, Mr. James Ramsden and Mr. Woodburn to have leave of absence to present, on behalf of this House, a Bookcase containing Parliamentary and constitutional reference books to the House of Representatives of Kenya.—[Mr. Bowden.]

Orders of the Day — TRAVEL AGENCIES

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Fitch.]

11.38 p.m.

Mr. Hugh D. Brown: The last time I was fortunate enough to secure an Adjournment debate it followed some Committee stage proceedings on the Finance Bill and began at 5.30 a.m. On that occasion I remember saying that one of the reasons why some Members were present was that they were waiting for the first tube train. If we hurry tonight, we might be lucky enough to catch the last tube train, as there are no taxis running.
The subject I intended to raise originally was the affairs of the Spain Only Travel Agency, but this is now a matter of general interest. I must pay tribute especially to the hon. and learned Member for Surrey, East (Mr. Doughty) and to my hon. Friend the Member for Blyth (Mr. Milne). I am sorry that my hon. Friend has not been able to advise me on some of his experiences. He is in hospital. I am sure that we all wish him a speedy recovery. Nevertheless, I know that this is a matter of general public interest.
What I have to say will not be responsible for any shaking of confidence in the £, and it will not really shatter confidence in the travel agencies. However, I want to be quite critical in one or two respects.
To refer to Spain Only, I accept the Ruling that, because a petition is being presented in the High Court, I cannot deal with the affairs of that company. I would just ask my right hon. Friend to watch the position, and, when the time is appropriate to raise the affair, I am sure that there will be a certain amount of interest from hon. Members who have had experience of it.
I should certainly like to mention how indebted many members of the public are to Hotel Plan, which stepped in with a rescue operation. It should also be pointed out that there was no official action by A.B.T.A. or T.T.A. in attempting any rescue operation.
The public are quite rightly concerned about the defaults of travel agents. I can refer to the case of Rentavilla,


where, again, we have had conflicting stories about a firm going out of existence and someone else trying to do a rescue operation. But, somewhere along the line, members of the public are losing money or holidays and, in many cases, both.
We have had evidence today of another kind of racket in the Costa Cabana Beach Club type of selling up of holiday villas. I may say that members of the public in Glasgow seem to have had more than their fair share of disappointment in the past as a result of the well known tragedies of Fiesta, Omar Khayyam, and English and Overseas Tours, to name but a few.
Rumours are dangerous, and all agencies must be on the alert when any agency, whether a member of an association or not, destroys the image which they would like to assume of being responsible and able to give a service to the public. It is not good enough for recognised travel agencies to wash their hands completely of those agents and agencies who are not allowed into the proper organisations.
I agree that this must present a problem to all of us in the sense that the eternal dilemma of how much competition is good and how much monopoly is good has to be faced up to by any one of us who is critical of the present situation. Somewhere along the line there needs to be a greater awareness created of the responsibility for giving greater protection to the customer and to the consumer.
Not being able to refer to the one travel agency about which I had accumulated a fair amount of information, I have to deal with general matters, and it is much more difficult to get the information which one requires from the experiences of members of the public. But I have the uneasy feeling that there are more complaints than we hear about, for the simple reason that people are generally unaware of how to go about getting redress for disappointment or letdown when dealing with a private travel agency. Therefore, perhaps a wave of publicity or a breath of air on this subject might unearth more information or evidence of the depth of the problem.
I want to quote two cases of which have knowledge, both concerning reputable

travel agencies. In the first, a person booking on behalf of six people went into a travel agency with a brochure on 2nd September, 1965. The travel agency was Lewis's, in Glasgow, and the holiday firm was Silver Wing Holidays. The party made the legitimate request for a certain holiday advertised in the brochure at an agreed price, to fly from Glasgow and to return to Glasgow. A normal deposit of £3 per person, or a total of £18, was paid on 2nd September.
On 15th February, 1966, they received another communication from the agency stating that it could not give them what they ordered on 2nd September. This seems incredible. Any Minister who attempted in this House to justify a delay of that nature in dealing with a claim for, say, National Insurance or for the provision of telephone service would be in an extremely difficult position.
In the second case, a party of two wanted to book a holiday, again in Jersey—I do not know whether there is a peculiar problem about Jersey—and booked with the Scottish Express Travel Agency. They paid the same deposit on 15th January this year. Not until three months later did they get word that this holiday, which they had been assured was available to them at the price quoted, was simply "not on".
This kind of thing seems to me to be rather unfortunate. I know that there are difficulties, but I would like to be assured, if possible, that this is not a common experience. I have a horrible feeling that there is more of it than one hears about. I am concerned because one can appreciate the disappointment of people at this kind of treatment.
In one of the cases which I have raised, in spite of the fact that the six people were told that little or nothing could be done about it, as soon as the agency people heard that I was raising the subject—I advised a constituent to let them know of this—within half an hour they telephoned back to say that they might be able to do something for the customers. I admit frankly to being guilty of a wee bit of blackmail here, but sometimes one can justify it; but it does not help the reputation of the agency.
There is one other point which I want to mention, and perhaps this, again, is a Glasgow experience. Many Glasgow


people have a warm regard for Blackpool. It is a matter of opinion. I shall certainly not say anything detrimental about Blackpool. It so happened that last week two groups of people, one of five people and the other of six, who booked through the same agent to travel on the same coach, were advised that the hotel or boardinghouse in which they had hooked had been sold. Their deposits were returned and they were told that there was no accommodation for them.
This is the kind of treatment that certainly does not enhance the reputation of a town like Blackpool, which, I know, has a good reputation for treating its holidaymakers. I would certainly like to know whether the hotel and boardinghouse association in places like Blackpool or other towns makes any attempt to safeguard the customers' position when there is a legitimate reason for sale and the hotel goes out of business. It does not do the holiday trade and the travel agency business any good when this kind of thing happens.
I know that with this increasing market, with more people going abroad, and more people having more money to spend on holidays, an element of cut-throat competition is coming into this business. Because of the glossy magazines and the wonderful photographs that are presented, who can blame some of the public for not reading the small print on some of the package deal tours? I think that this is happening because of the undue element of competition that is being introduced or allowed to come into this holiday business.
We hear all sorts of rumours about charter planes, sometimes British-owned, but more often foreign-owned, which are not really up to standard, certainly in the opinion of the laymen who have to travel in them. This might not be a matter for my hon. Friend, but I have no doubt that he can pass to the appropriate person the alarm which has been expressed on this point.
What I hope to accomplish in some small way this evening is to draw the attention of my hon. Friend to the public alarm that is being felt about this travel agency service, with all the political manoeuvring that is going on within the service. I do not mean this in a party sense, but within the trade, and we should at least have the opportunity of showing

that the Government are interested in what is going on, and are keeping a watchful eye on just how things are working out in this delicate business of trying to establish an organisation which will give greater protection not just to the members of the organisation, but to the customers.
A holiday is a most important part in a person's life. People who have not the glamour or the interest in their occupations that we might have, tend to treat a holiday as one of the most important things in their life, whether we like it or not. Sometimes we do not like it, but it is, nevertheless, true, and, therefore, the disappointment is all the more damaging when a person has built up such hopes of a holiday. I am sure, therefore, that I can rely on my hon. Friend to give me some words of comfort.

11.53 p.m.

The Minister of State, Board of Trade (Mr. Roy Mason): At this time of the year large numbers of our fellow countrymen are enjoying holidays in countries other than Britain, or have arranged to do so in the summer months ahead. Most of these holidays will have been arranged through, or by, British travel agents, and accordingly I am grateful to my hon. Friend the Member for Glasgow, Provan (Mr. Hugh D. Brown) for raising this subject tonight.
In view of what my hon. Friend said, I ought to say to him that if potential tourists are experiencing difficulties, and particularly if they are being let down, I should like to know. Details from either my hon. Friend or any Member would be welcomed, when I will be glad to look into them.
Perhaps we do not always fully realise the tremendous growth in international tourism which has taken place in the two decades since the war, and which continues to grow at a never slackening pace. In 1954, a mere 900,000 visitors came to our shores from abroad. Ten years later, by 1964, this figure had grown almost threefold to just under 24- million. By 1970, at the current rate of growth, it has been estimated that Britain will be attracting an annual inflow of at least 4 million visitors from overseas.
At the same time as increasing numbers of visitors arrive in Britain, more and more of our own residents are going


abroad for their holidays, and in many ways it would be wrong to regard this as anything other than an entirely healthy development.
International tourism is making an increasingly important contribution to the economic development of many countries throughout the world. Indeed, international tourism is not only a symbol of the free circulation of people and ideas, and of our democratic way of life, but is also a stimulus to economic development which no country, no matter how large or how small, can now afford to neglect.
The main theme of our debate, however, is the role and function of British travel agents. The Association of British Travel Agents has supplied to me its own estimate of the number of travel agents operating in this country. The number of firms who are members of A.B.T.A. is 1,143. To this figure must be added 275 firms which have applied for membership and whose applications are now being considered by the association. This produces a total of 1,418 firms which are members or potential members of A.B.T.A. In addition, the Association estimates that there may be a further 300 or 400 travel agents in the United Kingdom and, thus, that the overall number of travel agents operating in the United Kingdom is 1,700 to 1,800.
The 1,143 firms which are members of A.B.T.A. operate a total of 2,092 travel offices throughout the United Kingdom. The vast majority are firms of the highest repute and I should like to pay tribute to the work which they do in contributing to the health and happiness not only of our own citizens who go overseas for their holidays, but of the millions of people who visit our shores from overseas.
It is true that, occasionally, as a result of a firm ceasing to trade, a small number of holidaymakers have in the past suffered inconvenience or financial loss. However, I must emphasise that the number of such unfortunate cases in the past has been infinitesimal compared with the millions of our fellow countrymen who return to these shores each year entirely satisfied with the holidays which, in the majority of cases, have been arranged for them by travel agents or tour operators.
The Board of Trade recently carried out an exercise which indicated that, of the approximately three million United Kingdom residents who undertook inclusive tours abroad during 1964 and 1965, fewer than 100 were temporarily stranded abroad during their holidays as a result of the failures of the tour operators with whom they booked. This works out at only one in 30,000, or less than 0005 per cent.
Nevertheless, the Government are by no means complacent about the tiny minority of holidaymakers who have some legitimate complaint against the firms with whom they have booked. The House will recall that, on previous occasions, I have discussed the practicability of drafting legislation which would offer tourists some degree of protection against the risk of financial default by the organisers of inclusive tours without, at the same time, increasing the cost of holidays or by restricting legitimate enterprise or initiative. On balance, and given the inherrent difficulty which legislation presents, I think that it is preferable for the trade to deal, if possible, with this problem by action within its own organisation. Such action may be more likely to offer effective protection than statutory legislation.
What then are the measures being taken by the trade to protect the public against the misfortunes to which my hon. Friend has referred? First, I must refer to the accounts rules adopted by the Association of British Travel Agents in October, 1964, under which every member of the association, no matter whether he be a retail travel agent or a tour organiser, is required to submit balance sheets to an independent, qualified accountant at regular intervals of not more than twelve months. He is also required to open his books to the inspection of the accountant and to supply him with any other information which is considered necessary.
Thereafter, the accountant sends his report to the member concerned and the member himself must submit a signed copy of the accountant's report to the Council of A.B.T.A. within six months of the date of the balance sheet. Thus, the financial stability and standing of all members is checked by the Association.
In addition, the Association established in February of last year a common fund to which members contribute such sums as may be decided by the Council from time to time. This fund is to be used principally to prevent members of the travelling public from being stranded abroad because of financial default on the part of a member of the Association. To that extent, therefore, it may be described as a "rescue fund". The Association also intends to use it, if resources permit, for the benefit of tourists who have booked and paid for holidays which do not start because of the financial default of any member tour organiser.
The third and most publicised measure taken by A.B.T.A. was the introduction of "Operation Stabiliser", which was adopted towards the end of last year. This is complementary to the establishment of the common fund to which I have just referred. The substance of this arrangement is for the sale in the United Kingdom of holidays or tours to places outside the British Isles. First, tour operators who are members of A.B.T.A. shall appoint as agents and pay commission only to travel agents who are also members of A.B.T.A. Secondly, travel agents who are members of A.B.T.A. shall sell tours and holidays as defined above only on behalf of tour operators who are members of A.B.T.A.
I am aware that the introduction of "Operation Stabiliser" has caused some disquiet, particularly among travel agents who are not members of A.B.T.A. Accordingly, I repeat my assurance that we are watching the effects of this measure most carefully and will not hesitate to act should it show signs of developing in undesirable ways. Nevertheless, my main responsibility is to safeguard the interests of the travelling public, and I have no reason to doubt the sincerity of the trade in their determination to put their own house in order. I am also aware that the Association has its own code of conduct which governs relations between their members and the public, between members and principals and between members themselves.
I would like to take this opportunity of advising as strongly as I can members of the public to study most carefully the printed conditions governing their holiday before signing the booking or application form. We occasionally receive complaints at the Board of Trade from holiday-makers who have not taken this simple precaution and are subsequently disgruntled to find that the terms of their holiday are not quite what they expected. "Always read the small print" is a good motto for anyone signing the application for a holiday overseas.
I was pleased to hear my hon. Friend refer to this point. It is a good motto for any contract, but it is a particularly good motto for those planning to take a holiday abroad. Each failure, as I know from letters and complaints which I receive, is a human tragedy for the family because they have saved possibly for 12 months for their first holiday abroad. I warn them therefore, when making an application, to study the small print.
Most of the discussion tonight, brief as it has been, has centred on the work done by British travel agents on behalf of Britons seeking holidays abroad. But from the point of view of the national economy, the work which travel agents do in attracting overseas residents to our shores is even more important and will continue to be so. Nevertheless, British travel agents have much to be proud of for the work they have done in recent years in enabling many of our countrymen to take and enjoy their holiday overseas. When the travel trade has fully implemented its measures to protect and safeguard the travelling public we shall have even more reason to be grateful for the valuable service they provide.
I wish, in conclusion, once more to thank my hon. Friend the Member for Provan for raising this topic and for giving me, at this opportune moment, this chance to warn the travelling public to remember, before signing a contract, that they must read the document first.

Question put and agreed to.

Adjourned accordingly at five minutes past Twelve o'clock.